BILL ANALYSIS
AB 2799
Page 1
ASSEMBLY THIRD READING
AB 2799 (Calderon)
As Amended May 20, 2004
Majority vote
UTILITIES AND COMMERCE 9-1
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|Ayes:|Campbell, Bogh, Calderon, | | |
| |Diaz, Jerome Horton, La | | |
| |Malfa, Houston, | | |
| |Ridley-Thomas, Wesson | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Reyes | | |
| | | | |
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SUMMARY : Requires only the essential terms of an agreement be
adequately disclosed in written solicitations mailed to
customers. Also establishes payment obligations for customers
as a result of contractual obligations for a product or service.
Specifically, this bill requires:
1)Only the essential terms of the agreement of an ordering form
that is mailed with any written solicitation material to be
clear, conspicuous, legible in the ordering form, in a minimum
of 10-point type, and written in the same language as the
written solicitation material.
2)Specifies the company has no further obligation to provide any
more documentation or disclosure of the terms of the agreement
as a result of the customer returning the enclosed ordering
form.
3)That any customer contract with terms requiring or authorizing
the telephone company to provide the product or service is
prima facie evidence of authorization by the customer.
FISCAL EFFECT : None
COMMENTS :
1)Purpose of this bill: Requires that only the essential terms
of an agreement in a customer order form, to be defined by the
AB 2799
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telephone carrier, be clear, conspicuous, and legible in the
order form and in 10-point type. This disclosure requirement
would only apply when a telephone carrier mails written
solicitation to a customer that includes an order form for a
product or service but not in the case where a customer may
walk into a store location. Furthermore, this bill only
requires the essential terms of an agreement be in the same
language as in the written solicitation material versus having
it apply to all of the information.
Specifies that for any charge subject to a rebuttable
presumption the existence of a contract between the customer
and the telephone carrier is prima facie evidence of
authorization.
2)This bill weakens existing law protecting consumers against
cramming and deceptive marketing tactics. Existing law
requires telephone carriers when marketing products or
services to customers to separate the order form from the
solicitation material to prevent any confusion on the
customers part of what is marketing material and what is an
order form. Existing law requires that order forms and
solicitation materials be unambiguous, legible and minimum of
10-point type. Existing law requires that written or oral
solicitations used to obtain an order form from a customer be
in the same language as the written order. This is designed
to prevent deceptive marketing toward non-English speaking
customers to get them to pay for products or services that
they don't need.
In the past deceptive marketing tactics like "cramming" have
been directed primarily to non-English speaking minority
communities like farm workers to force them to pay for
products and services that they don't need or in some cases
never received.
Prior examples of marketing abuses that led to the passage of
legislation preventing cramming was in 1987 where SBC/Pacific
Bell was forced to pay $83 million in fines and consumer
refunds for engaging in deceptive marketing practices. In
that case the California Public Utilities Commission (CPUC)
found that the company had unfairly targeted farm workers,
recent immigrants and other limited English speakers that
could not read their bills proficiently enough to know that
they were being charged for expensive custom calling features
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that they neither wanted or needed.
In the case of other telephone carriers like WorldCom (now
MCI) in 2000, at least seven states filed consumer protection
lawsuits against it for misleading and deceiving consumers
with its advertising and other marketing practices. The
Attorney General of California at that time said that
WorldCom's "Five Cents Everyday" calling plan and other
services had misleading advertisements and that the company
was billing customers for services that were not specifically
authorized.
3)This bill jeopardizes the implementation of the Consumer Bill
of Rights that is being proposed by CPUC. This bill amends
the code section that underpins the statutory authority of the
proposed Consumer Bill of Rights being discussed at CPUC. The
Consumer Bill of Rights was initiated by CPUC on June 6, 2002,
based on evidence and documentation of need in two previous
proceedings dealing with non-communication related charges on
telephone bills and a proceeding to develop rules on slamming.
"Slamming" is when a telephone carrier changes a customer's
telephone provider without their authorization.
CPUC has yet to finalize its decision on a Consumer Bill of
Rights as of this date but numerous wireless telephone
carriers are opposed the measure citing that state regulations
should not apply toward them.
The consumer groups point out that the Consumer Bill of Rights
is absolute necessary to provide better service to consumers
and enhance competition in the telecommunications market where
a broad array of telecommunication providers has resulted in
service deterioration, deceptive marketing, and increased
billing complaints to name a few.
Analysis Prepared by : Daniel Kim / U. & C. / (916) 319-2083
FN: 0005470