NY State Senate Bill 2015-S2502

Senate Bill S2502

2015-2016 Legislative Session

Requires authorization for and verification of the validity of third-party charges for products and services billed to a customer on bills issued by telecommunication providers

download bill text pdf

Archive: Last Bill Status - In Senate Committee Consumer Protection Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 06, 2016	referred to consumer protection
Jan 26, 2015	referred to consumer protection

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2015-S2502 (ACTIVE) - Details

Current Committee:: Senate Consumer Protection
Law Section:: General Business Law
Laws Affected:: Add §399-zzzz, Gen Bus L
Versions Introduced in Other Legislative Sessions:: 2011-2012: S3873
2013-2014: S3275
2017-2018: S5024
2019-2020: S2456

2015-S2502 (ACTIVE) - Summary

Requires authorization by the customer, and verification by the telecommunications providers, of the validity of third-party charges for products and services billed to a customer on bills issued by telecommunication providers to their customers.

2015-S2502 (ACTIVE) - Sponsor Memo

                                BILL NUMBER:S2502

TITLE OF BILL:  An act to amend the general business law, in relation
to requiring authorization by the customer, and verification by the
telecommunications providers, of the validity of third-party charges
for products and services billed to a customer on bills issued by
telecommunication providers to their customers

PURPOSE:

To help reduce the incidents of cramming and to provide remedies that
offer greater protection to the telecommunications customers of all
providers.

SUMMARY OF PROVISIONS:

This bill amends the general business law by adding a new section,
399-zzzz, which: defines "cramming" as a form of fraud in which
charges are added to a bill by a third party without the knowledge or
authorization of the subscriber; institutes a set of requirements for
submitting charges to a customer's bill; institutes a set of
requirements for third party verification of charges added to a
customer's bill; institutes a set of requirements for maintaining
records of disputed charges; requires that billing carriers and
billing agents must have a protocol set in place for identifying
unauthorized charges and, suspending or terminating contracts with

billing agents or service providers that have submitted unauthorized
charges; deems any unauthorized charges submitted by a third party to
be void and unenforceable; requires billing carriers to provide
information to their customers regarding a course of action to dispute
unauthorized charges.

Authorizes the Attorney General's office to investigate complaints of
cramming; authorizes the Attorney General's office to pursue civil
action against third party providers and billing agents found to be
engaging in cramming; authorizes the Attorney General's office to bar
any service provider or billing agent who has been found to be in
violation of this section or otherwise engaging in unscrupulous
practices from contracting with any billing carrier in New York State.

JUSTIFICATION:

"Cramming", the act of fraudulently adding unauthorized charges to a
Person's bill without their knowledge or consent is one of the leading
consumer complaints in New York. Often, customers are unaware that
they are the victims of cramming because the charges are small enough
that the customer doesn't notice. Additionally, with phone bills
typically being multiple pages, many customers do not notice the
unauthorized charges on their bills. This scam particularly targets
senior citizens.

While the practice of "cramming" is illegal, there is a significant
lack of enforcement. When a customer believes that unauthorized
charges have been added to their bill, the onus is on them to resolve
the issue and recoup their money. They must first call their
telecommunications provides and get the charge removed.
Unfortunately, simply having the service provider remove the charge


does not solve the problem. The third party provider that submitted
the unauthorized charge may try to add that charge on the next bill or
may pursue the money through a collection agency. The customer must
find the company that put the unauthorized charge on their bill, spend
hours on the phone disputing the charge, and then hope the company
agrees to reimburse them and not resubmit the charge the following
month. To reach a final resolution of this issue often takes months to
occur and many valuable personal hours by the consumer. The state
should be doing more to shift the burden of proof from the customer to
the companies accused of cramming. This legislation will put
mechanisms in place to ensure that customers have an easier time
disputing unauthorized charges, as well as ensuring that phone service
providers and the Attorney General's office are shutting down
companies found to be engaging in cramming.

EFFECTIVE DATE:

This act shall take effect on the 120th day after it shall have become
law; provided however that effective immediately, the addition,
amendment, and/or repeal of any rule or regulation necessary for the
implementation of this act on its effective date are authorized and
directed to be made and completed on or before such effective date.

2015-S2502 (ACTIVE) - Bill Text download pdf

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  2502

                       2015-2016 Regular Sessions

                            I N  S E N A T E

                            January 26, 2015
                               ___________

Introduced  by  Sen. KRUEGER -- read twice and ordered printed, and when
  printed to be committed to the Committee on Consumer Protection

AN ACT to amend the general  business  law,  in  relation  to  requiring
  authorization  by  the  customer, and verification by the telecommuni-
  cations providers, of the validity of third-party charges for products
  and services billed to a customer on bills issued by telecommunication
  providers to their customers

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1.  Legislative  findings  and purpose. The legislature finds
that some third-party companies are placing unauthorized service charges
on telecommunications customers' monthly bills. The practice is commonly
called "cramming". Cramming is a form of  fraud  in  which  charges  are
added  to  a  bill  by  a  third party without the customer's consent or
disclosure. The legislature further finds  that  many  New  Yorkers  are
switching  to  phone service provided by cable TV or Internet companies.
These companies can also offer third-party billing that may inadvertent-
ly result in fraud through no fault of their own  actions.  Accordingly,
the  purpose  of this act is to help reduce the level of cramming and to
provide remedies that offer greater protection to the telecommunications
customers of all service providers.
  S 2. The general business law is amended by adding a new section  399-
zzzz to read as follows:
  S  399-ZZZZ.  AUTHORIZATION  AND  VERIFICATION FOR PRODUCT AND SERVICE
CHARGES TO BE BILLED ON A CONSUMER'S BILL. 1. DEFINITIONS. FOR  PURPOSES
OF THIS SECTION:
  (A) "BILLING AGENT" MEANS ANY ENTITY THAT SUBMITS CHARGES TO THE BILL-
ING CARRIER ON BEHALF OF ITSELF OR ANY SERVICE PROVIDER.
  (B)  "BILLING  CARRIER" MEANS ANY TELEPHONE CORPORATION, AS DEFINED IN
SUBDIVISION SEVENTEEN OF SECTION TWO OF  THE  PUBLIC  SERVICE  LAW,  AND
EVERY CABLE TELEVISION COMPANY, AS DEFINED IN SUBDIVISION ONE OF SECTION

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD05700-01-5

S. 2502                             2

TWO  HUNDRED TWELVE OF THE PUBLIC SERVICE LAW THAT PROVIDES TELEPHONE OR
LIKE SERVICE TO CUSTOMERS IN THE STATE OF NEW YORK, THAT ISSUES  A  BILL
DIRECTLY  TO  A  CUSTOMER  FOR  ANY PRODUCT OR SERVICE NOT PROVIDED BY A
TELECOMMUNICATIONS  CARRIER,  ITS AFFILIATE OR THIRD PARTY PROVIDER WITH
WHOM A TELEPHONE CORPORATION OR CABLE TELEVISION COMPANY OR THEIR AFFIL-
IATES JOINTLY MARKET SERVICES.
  (C) "CRAMMING" MEANS A FORM OF FRAUD IN WHICH CHARGES ARE ADDED  TO  A
BILL  BY A THIRD PARTY WITHOUT THE SUBSCRIBER'S AUTHORIZATION OR DISCLO-
SURE.
  (D) "SERVICE PROVIDER" MEANS ANY  ENTITY  THAT  OFFERS  A  PRODUCT  OR
SERVICE  TO  A  CONSUMER  AND  THAT DIRECTLY OR INDIRECTLY CHARGES TO OR
COLLECTS FROM A CONSUMER'S BILL  RECEIVED  FROM  A  BILLING  CARRIER  AN
AMOUNT  FOR  THE  PRODUCT  OR  SERVICE.  FOR PURPOSES OF THIS SECTION, A
SERVICE PROVIDER SHALL NOT INCLUDE AN AFFILIATE OF A BILLING CARRIER  OR
A  THIRD  PARTY  PROVIDER  WITH WHOM A BILLING CARRIER OR ITS AFFILIATES
JOINTLY MARKET SERVICES.
  2. REQUIREMENTS FOR SUBMITTING CHARGES.  (A)  A  SERVICE  PROVIDER  OR
BILLING  AGENT  MAY SUBMIT CHARGES FOR A PRODUCT OR SERVICE TO BE BILLED
ON A CONSUMER'S BILL ONLY IF:
  (1) THE SERVICE PROVIDER OFFERING THE PRODUCT OR SERVICE  HAS  CLEARLY
AND  CONSPICUOUSLY  DISCLOSED  ALL  MATERIAL TERMS AND CONDITIONS OF THE
PRODUCT OR SERVICE BEING OFFERED, INCLUDING, BUT  NOT  LIMITED  TO,  ALL
CHARGES;  AND THE FACT THAT THE CHARGES FOR THE PRODUCT OR SERVICE SHALL
APPEAR ON THE CONSUMER'S BILL;
  (2) AFTER THE CLEAR AND CONSPICUOUS DISCLOSURE OF ALL  MATERIAL  TERMS
AND  CONDITIONS BY THE SERVICE PROVIDER AS DESCRIBED IN SUBPARAGRAPH ONE
OF THIS PARAGRAPH, THE CONSUMER HAS EXPRESSLY CONSENTED  TO  OBTAIN  THE
PRODUCT OR SERVICE OFFERED AND TO HAVE THE CHARGES APPEAR ON THE CONSUM-
ER'S  BILL  AND THE CONSENT HAS BEEN VERIFIED BY THE SERVICE PROVIDER AS
PROVIDED IN PARAGRAPH (B) OF THIS SUBDIVISION;
  (3) THE SERVICE PROVIDER OFFERING THE PRODUCT OR SERVICE OR ANY  BILL-
ING  AGENT  FOR  THE  SERVICE  PROVIDER HAS PROVIDED THE CONSUMER WITH A
TOLL-FREE TELEPHONE NUMBER THE CONSUMER MAY CALL AND AN ADDRESS TO WHICH
THE CONSUMER MAY WRITE TO RESOLVE ANY  BILLING  DISPUTE  AND  TO  ANSWER
QUESTIONS; AND
  (4)  THE SERVICE PROVIDER OFFERING THE PRODUCT OR SERVICE OR THE BILL-
ING AGENT HAS TAKEN EFFECTIVE STEPS TO DETERMINE THAT THE  CONSUMER  WHO
PURPORTEDLY  CONSENTED  TO  OBTAIN  THE  PRODUCT  OR  SERVICE OFFERED IS
AUTHORIZED TO INCUR CHARGES FOR THE TELEPHONE NUMBER TO BE BILLED.
  (B) THE CONSUMER CONSENT REQUIRED BY PARAGRAPH (A) OF THIS SUBDIVISION
MUST BE VERIFIED BY THE SERVICE PROVIDER OFFERING THE PRODUCT OR SERVICE
BEFORE ANY CHARGES ARE SUBMITTED FOR BILLING ON  A  CONSUMER'S  BILL.  A
RECORD  OF  THE  CONSUMER CONSENT AND VERIFICATION MUST BE MAINTAINED BY
THE SERVICE PROVIDER OFFERING THE PRODUCT OR SERVICE FOR A PERIOD OF  AT
LEAST  TWENTY-FOUR MONTHS IMMEDIATELY AFTER THE CONSENT AND VERIFICATION
HAVE BEEN OBTAINED. THE METHOD OF OBTAINING CONSUMER CONSENT AND VERIFI-
CATION SHALL INCLUDE ONE OR MORE OF THE FOLLOWING:
  (1) A WRITING, SIGNED AND DATED BY THE CONSUMER  TO  BE  BILLED,  THAT
CLEARLY AND CONSPICUOUSLY DISCLOSES THE MATERIAL TERMS AND CONDITIONS OF
THE PRODUCT OR SERVICE BEING OFFERED IN ACCORDANCE WITH PARAGRAPH (A) OF
THIS  SUBDIVISION  AND  WHICH  CLEARLY AND CONSPICUOUSLY STATES THAT THE
CONSUMER  EXPRESSLY  CONSENTS  TO  BE  BILLED  IN  ACCORDANCE  WITH  THE
PROVISIONS OF THIS SUBDIVISION AS FOLLOWS:
  (A)  IF  THE  WRITING IS IN ELECTRONIC FORM, THEN IT SHALL CONTAIN THE
CONSUMER DISCLOSURES REQUIRED BY SECTION 101(C) OF THE FEDERAL ELECTRON-
IC SIGNATURES IN GLOBAL AND NATIONAL COMMERCE ACT; AND

S. 2502                             3

  (B) THE WRITING SHALL BE A SEPARATE DOCUMENT OR EASILY SEPARABLE DOCU-
MENT OR LOCATED ON A SEPARATE SCREEN  OR  WEBPAGE  CONTAINING  ONLY  THE
DISCLOSURES AND CONSENT DESCRIBED IN THIS SUBDIVISION;
  (2) THIRD-PARTY VERIFICATION BY AN INDEPENDENT THIRD PARTY THAT:
  (A)  CLEARLY  AND CONSPICUOUSLY DISCLOSES TO THE CONSUMER TO BE BILLED
ALL OF THE INFORMATION REQUIRED BY PARAGRAPH (A) OF THIS SUBDIVISION;
  (B) OPERATES FROM A FACILITY PHYSICALLY  SEPARATE  FROM  THAT  OF  THE
SERVICE PROVIDER OFFERING THE PRODUCT OR SERVICE;
  (C)  IS  NOT  DIRECTLY OR INDIRECTLY MANAGED, CONTROLLED, DIRECTED, OR
OWNED WHOLLY OR IN PART BY THE SERVICE PROVIDER OFFERING THE PRODUCT  OR
SERVICE;
  (D)  DOES NOT DERIVE COMMISSIONS OR COMPENSATION BASED UPON THE NUMBER
OF SALES CONFIRMED;
  (E) TAPE RECORDS THE ENTIRE VERIFICATION PROCESS, WITH  PRIOR  CONSENT
OF THE CONSUMER TO BE BILLED; AND
  (F) OBTAINS CONFIRMATION FROM THE CONSUMER TO BE BILLED THAT HE OR SHE
AUTHORIZED THE PURCHASE OF THE OFFERED GOOD OR SERVICE.
  ALL VERIFICATIONS MUST BE CONDUCTED IN THE SAME LANGUAGE THAT WAS USED
IN THE UNDERLYING SALES TRANSACTION.
  (C) UNLESS VERIFICATION IS REQUIRED BY FEDERAL LAW OR RULES IMPLEMENT-
ING  FEDERAL  LAW,  THE  PROVISIONS OF PARAGRAPH (B) OF THIS SUBDIVISION
SHALL NOT APPLY TO CUSTOMER-INITIATED TRANSACTIONS WITH  A  CERTIFICATED
TELECOMMUNICATIONS CARRIER FOR WHICH THE SERVICE PROVIDER HAS THE APPRO-
PRIATE DOCUMENTATION.
  (D)  THE  PROVISIONS  OF  THIS  SECTION  SHALL NOT APPLY TO COMMERCIAL
MOBILE RADIO SERVICES, OR  MESSAGE  TELECOMMUNICATIONS  SERVICE  CHARGES
THAT  THE END-USER CUSTOMER INITIATES BY DIALING 1+, 0+, 0-, 1010XXX, OR
COLLECT CALLS AND CHARGES FOR VIDEO SERVICES IF THE SERVICE PROVIDER HAS
THE NECESSARY RECORDS TO ESTABLISH THE BILLING FOR THE CALL OR SERVICE.
  3. RECORDS OF DISPUTED CHARGES. (A) EVERY SERVICE PROVIDER OR  BILLING
AGENT  SHALL  MAINTAIN RECORDS OF EVERY DISPUTED CHARGE FOR A PRODUCT OR
SERVICE PLACED ON A CONSUMER'S BILL.
  (B) THE RECORD REQUIRED UNDER THIS SUBDIVISION SHALL CONTAIN FOR EVERY
DISPUTED CHARGE ALL OF THE FOLLOWING:
  (1) ANY AFFECTED TELEPHONE NUMBERS AND, IF AVAILABLE, ADDRESSES;
  (2) THE DATE THE  CONSUMER  REQUESTED  THAT  THE  DISPUTED  CHARGE  BE
REMOVED FROM THE CONSUMER'S BILL;
  (3) THE DATE THE DISPUTED CHARGE WAS REMOVED FROM THE CONSUMER'S BILL;
AND
  (4)  THE DATE ACTION WAS TAKEN TO REFUND OR CREDIT TO THE CONSUMER ANY
MONEY THAT THE CONSUMER PAID FOR THE DISPUTED CHARGES.
  (C) THE RECORD REQUIRED BY THIS SUBDIVISION SHALL BE MAINTAINED FOR AT
LEAST TWENTY-FOUR MONTHS.
  4. COMPLIANCE.  BILLING AGENTS SHALL TAKE REASONABLE STEPS DESIGNED TO
ENSURE THAT SERVICE PROVIDERS ON WHOSE BEHALF THEY SUBMIT CHARGES  TO  A
BILLING CARRIER COMPLY WITH THE REQUIREMENTS OF THIS SECTION.
  5.  VIOLATION.  ANY SERVICE PROVIDER OR BILLING AGENT WHO VIOLATES THE
PROVISIONS OF THIS SECTION COMMITS AN UNLAWFUL PRACTICE.
  (A) IF A CUSTOMER DISPUTES A CHARGE FROM A SERVICE PROVIDER OR BILLING
AGENT AND HAS IT REMOVED FROM THEIR BILL, NEITHER THE  BILLING  CARRIER,
SERVICE  PROVIDER,  OR  BILLING  AGENT  CAN PUT THE SAME CHARGE FROM THE
SERVICE PROVIDER ON ANY FUTURE BILLS UNLESS THE CUSTOMER HAS  EXPLICITLY
GRANTED APPROVAL TO DO SO.
  (B)  IF  A  CUSTOMER CONTACTS THE SERVICE PROVIDER DIRECTLY INSTEAD OF
CALLING THE BILLING CARRIER REGARDING AN UNAUTHORIZED  CHARGE  ON  THEIR
TELEPHONE  BILL,  THE  SERVICE  PROVIDER  MUST AGREE TO PROVIDE A CREDIT

S. 2502                             4

ADJUSTMENT TO THE BILL. ANY FURTHER COLLECTION ATTEMPTS ON THE  PART  OF
THE SERVICE PROVIDER SHOULD NOT INCLUDE THE BILL.
  (C)  ANY  UNAUTHORIZED SERVICE CHARGES ON TELECOMMUNICATIONS CUSTOMERS
WILL BE DEEMED VOID AND UNENFORCEABLE. SERVICE PROVIDERS FOUND  TO  HAVE
SUBMITTED  UNAUTHORIZED  SERVICE  CHARGES  CANNOT  PURSUE  SAID  CHARGES
THROUGH COLLECTION AGENCIES.
  (D) EACH BILLING CARRIER AND BILLING AGENT SHALL  HAVE  IN  PLACE  AND
COMPLY WITH A PROTOCOL FOR IDENTIFYING UNAUTHORIZED CHARGES AND SUSPEND-
ING  OR  TERMINATING  BILLING  SERVICES  TO ANY BILLING AGENT OR SERVICE
PROVIDER THAT HAS SUBMITTED UNAUTHORIZED CHARGES.
  (E) IF A CUSTOMER CONTACTS A BILLING CARRIER TO DISPUTE A BILLED  ITEM
FROM  A  BILLING  AGENT  OR  SERVICE  PROVIDER, THE BILLING CARRIER MUST
PROMPTLY ADDRESS THE DISPUTE BEFORE REFERRING THE CUSTOMER TO THE  BILL-
ING AGENT OR SERVICE PROVIDER WHEN THE CUSTOMER INDICATES THE PRODUCT OR
SERVICE WAS NOT AUTHORIZED. THIS INCLUDES, BUT IS NOT LIMITED TO, REMOV-
ING  THE  UNAUTHORIZED  CHARGES  FROM THE CUSTOMER'S BILL, ENSURING THAT
UNAUTHORIZED CHARGES FROM THE SAME SERVICE  PROVIDER  OR  BILLING  AGENT
WILL  NOT  CONTINUE  TO  APPEAR ON THE CUSTOMER'S BILL, AND OFFERING THE
CUSTOMER THE OPTION TO BAR ALL THIRD-PARTY BILLING ON THEIR BILL.
  (F) ANNUALLY, BILLING CARRIERS  SHALL  PROVIDE  INFORMATION  TO  THEIR
CUSTOMERS  REGARDING  A COURSE OF ACTION TO DISPUTE UNAUTHORIZED CHARGES
FROM SERVICE PROVIDERS. THIS SHALL INCLUDE, BUT IS  NOT  LIMITED  TO,  A
DEFINITION  OF  CRAMMING, HOW TO DISPUTE AN UNAUTHORIZED CHARGE, AND HOW
TO FILE A COMPLAINT WITH THE ATTORNEY GENERAL'S OFFICE.
  (G) THIRD-PARTY CHARGES SHALL BE SEPARATED FROM DIRECT  CHARGES  IN  A
CLEAR MANNER.
  (H)  BILLING  CARRIERS  CANNOT DISCONNECT SERVICES OVER THE FAILURE TO
PAY A DISPUTED THIRD PARTY CHARGE.
  (I) THE ATTORNEY GENERAL'S OFFICE SHALL HAVE THE AUTHORITY TO INVESTI-
GATE COMPLAINTS OF CRAMMING.
  (J) THE ATTORNEY GENERAL'S OFFICE SHALL HAVE THE AUTHORITY  TO  PURSUE
CIVIL  ACTION AGAINST SERVICE PROVIDERS AND BILLING AGENTS FOUND TO HAVE
BEEN ENGAGING IN CRAMMING.
  (K) THE ATTORNEY GENERAL'S OFFICE SHALL HAVE THE AUTHORITY  TO  BLACK-
LIST  ANY  SERVICE PROVIDER OR BILLING AGENT WHO HAS BEEN FOUND TO BE IN
VIOLATION OF THIS SECTION OR  OTHERWISE  PARTICIPATING  IN  UNSCRUPULOUS
PRACTICES FROM CONTRACTING WITH ANY BILLING CARRIER IN NEW YORK STATE.
  S 3. This act shall take effect on the one hundred twentieth day after
it  shall have become a law; provided, however that effective immediate-
ly, the addition, amendment and/or repeal  of  any  rule  or  regulation
necessary  for  the implementation of this act on its effective date are
authorized and directed to be made  and  completed  on  or  before  such
effective date.

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Senate Bill S2502

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Liz Krueger