BILL ANALYSIS 1
1
SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
DEBRA BOWEN, CHAIRWOMAN
AB 2244 - Wayne Hearing
Date: June 25, 2002 A
As Amended: May 13, 2002
Non-FISCAL B
2
2
4
4
DESCRIPTION
Current law requires companies that sell prepaid phone
cards and services (companies) to register with the
California Public Utilities Commission (CPUC).
Current law requires companies that advertise prices or
rates for prepaid phone card services to disclose any
geographic limitation or additional charges that apply to
the advertised price or rate.
Current law requires companies to print on prepaid phone
cards: 1) the name of the company, 2) a toll-free customer
service number, 3) a toll-free network access number, 4) an
authorization code, and 5) the expiration date or policy.
Current law requires companies to disclose on the prepaid
phone card or packaging, and requires a vendor to
prominently display at the point of sale, information about
the fees, charges, and policies associated with the
service.
Current law requires companies to disclose whether there
are additional or different prices or rates for
international calls.
Current law requires companies to provide toll-free
customer service telephone numbers staffed with live
operators to answer questions and accept complaints from
customers.
Current law allows companies to notify customers about
payphone surcharges via a voice prompt that occurs when the
customer is dialing at a payphone.
This bill requires all rates for international calls to be
disclosed on the card or packaging and to be made available
at the point of sale.
This bill requires toll-free customer service telephone
numbers to have sufficient capacity and staffing to
accommodate calls without leaving customers with a busy
signal or a long wait.
This bill requires companies to maintain access lines with
enough capacity to allow customers to place calls using
their phone cards without getting busy signals or delays
due to overloaded networks.
This bill requires companies to give customers enough time
to hang up and avoid any charge after a voice prompt
notification of the amount of the payphone surcharge.
This bill prohibits companies from imposing a fee or
surcharge for calls that aren't connected and prohibits any
fee or surcharge that isn't disclosed on the card packaging
and at the point of sale, as required by law.
This bill requires that if a language other than English is
used on the card or packaging, or in an advertisement or
promotion for the card, the disclosures required under
current law and under this bill must also be made in that
language.
BACKGROUND
Prepaid phone cards allow people to buy call time in
advance and make calls from a telephone without using cash
or credit cards. To make a call using a prepaid phone
card, the consumer must dial a toll-free access number,
followed by the telephone number the consumer is trying to
reach. As calls are made, the balance on the card (or
account) is automatically reduced. Many cards are
rechargeable, allowing people to buy more call time using a
credit card over the phone or Internet. Prepaid phone
cards are sold in most supermarkets, drug stores,
convenience stores and gas stations, and can be bought
through the mail and over the Internet.
According to a Frost & Sullivan market study, sales of
prepaid phone card services reached $3.26 billion in 2000,
$3.77 billion in 2001, and will reach an estimated $4.12
billion in 2002. According to the International Prepaid
Communications Association, more than 500 million cards
will be sold in 2002.
In February 2002, AT&T and the City and County of San
Francisco were named in a class action lawsuit alleging the
prepaid phone cards they sold violated the rate disclosure
requirements for prepaid phone cards required by law. The
plaintiffs, Scott Nisbet and Daniel David of Berkeley,
complained of hidden charges for pay phone use and
international calls. AT&T sells prepaid phone cards in
conjunction with the City and County of San Francisco at
vending machines at San Francisco International Airport.
COMMENTS
1)Improving Disclosure. In response to consumer complaints
that some phone cards don't provide the amount of call
time advertised, this bill requires international rates
for prepaid phone card services to be disclosed in
writing with the card and at the point of sale. In
addition, the bill clarifies a requirement in current law
that companies selling prepaid phone cards may not impose
fees and charges they don't disclose up front. Since
companies typically offer service to hundreds of foreign
countries, the author and committee may wish to consider
amending the bill to allow companies to simply list their
highest international rate or surcharge.
2)Disclosures and customer service in foreign languages.
The bill also helps the non-English speaking population
understand prepaid phone card services by requiring
companies that advertise in a foreign language to make
the service disclosures required by law in that same
language. In addition, the author and the committee may
wish to consider requiring companies to provide customer
service assistance in each language used on the card,
packaging, or advertisement.
3)Fees for customer service . Since consumers have
complained about charges for calling customer service,
the author and the committee may wish to consider
prohibiting companies from imposing fees or surcharges
for obtaining customer service assistance.
4)Putting a stop to delays and busy signals . In response
to consumer complaints of delays and busy signals
experienced both when trying to reach a customer service
representative and when trying to place a call, this bill
requires companies to provide adequate customer service
assistance and access line capacity.
5)Delaying the effective date . In order to allow companies
time to design and print new prepaid phone cards and
vendors to clear their existing inventory, the author and
the committee may wish to consider delaying the effective
date of the bill to July 1, 2003.
6)Technical Amendments. The bill bans prepaid phone card
companies from charging a fee for calls that don't
connect. As such, the reference to the disclosure of
such a fee should be removed by deleting the words "or
connection" on Page 3, Line 10. The author and committee
may wish to consider amending the bill to clarify that
the customer shall not be considered "connected" to the
number called if the customer receives a busy signal or
the call is unanswered.
In addition, to clarify that the value of the card and
the rate disclosures must be made in a uniform format,
the following language should be added to the bill:
On Page 3, Line 9, strike out "Any" and insert: "The
value of the card and any"
On Page 5, Line 15, after the period, insert:
"The value of the card and the amount of the charges,
however denominated, required to be disclosed by
paragraph (3), shall be expressed in the same format.
If the value of a card is expressed in minutes, the
minutes shall be identified as domestic or
international and the identification shall be printed
on the same line or next line as the value of the card
in minutes."
7)Prior Legislation . This bill builds on AB 1994 (Bowen),
Chapter 802, Statues of 1998, which established
disclosure and service requirements for prepaid phone
card sellers in California, giving consumers the ability
to make informed decisions when purchasing and using
prepaid phone card services. This bill expands the
disclosures and strengthens the services required by AB
1994.
PRIOR VOTES
Senate Business & Professions Committee(7-0)
Assembly Floor (60-12)
Assembly Business & Professions Committee(8-1)
POSITIONS
Sponsor:
Author
Support:
California Attorney General Bill Lockyer
Consumer Action
Consumers Union
Office of Ratepayer Advocates
Older Women's League of California
Service Employees International Union, AFL-CIO, CLC
United Farm Workers of America, AFL-CIO
Oppose:
None on file.
Jennie Bretschneider
AB 2244 Analysis
Hearing Date: June 25, 2002