Relates to residential wireless telephone service

Section 2 of the bill is the statement of legislative findings and purpose.

Section 3 of the bill amends the General Business Law by adding a new section 398-e, which establishes wireless telephone fair practices, and a complaint process with the Consumer Protection Board. New GBL

§398-e has 8 subdivisions. Subdivision 1 sets out definitions. Subdivision 2 requires disclosure of calling plans, monthly fees, airtime minutes, additional charges, termination fees, length of trial periods, E-911 service, and coverage maps and areas. It also requires a good faith estimate of the anticipated total monthly bill. Subdivision 3 requires clearly organized wireless bills with billing that is done in plain language.

Subdivision 4 of new GBL §398-e requires a trial use period of fifteen days after the first monthly bill has been issued. A customer may cancel within the fifteen day trial period without a termination fee. Subdivision 5 gives the Consumer Protection Board's executive director authority to receive and resolve consumer complaints, subpoena power, and authority to assess civil penalties for violations. Subdivisions 6, 7 and 8 provide for reporting, applicability and severability.

Section 4 of the bill amends paragraph (a) of subdivision 6 of section 5 of the Public Service Law.

Section 5 of the bill is the effective date.

Justification

The rapid development of wireless telephone technologies has increased the affordability and use of the services, and as a result, many consumers now use cell phones as a primary mode of communication. Many other customers, especially older ones, use cell phones primarily for safety in the event of emergencies during travel. The wireless industry has evolved to the point where different providers offer various calling plans, rates and other services. However, many consumers find the plethora of plans confusing and providers do not always fully disclose the terms of service. Lack of full disclosure can make it difficult to evaluate calling plans or to compare different plans. Moreover, wireless plans often lock consumers into long term contracts with high cancellation costs.

The Wireless Telephone Consumer Protection Act (the Act) will give the Consumer Protection Board authority to regulate wireless telephone service providers with respect to consumer protections, to establish and administer a consumer complaint resolution process, and to assess administrative penalties for noncompliance with the Act or implementing regulations or orders. The legislation would also provide specific protections for consumers, including the right to cancel service without any termination fees within 15 days after the first wireless telephone bill has been issued to the customer. This provision would give a meaningful remedy to the customer who receives a bill that is significantly higher than expected, or advertised. The Act would require providers to disclose detailed coverage showing where cell phone service is and is not available, a significant issue for customers who buy cell phones for safety when driving. Other protections include: requiring upfront disclosure of monthly fees, taxes, surcharges and additional charges for using the cell phone, a formal consumer complaint process at the Consumer Protection Board, information regarding basic and enhanced wireless 911 service, good faith estimates of anticipated monthly bills, and clearly organized bills written in plain language.

In March 2006, the Assembly Committee on Consumer Affairs and Protection held a public hearing at which both industry and consumer representatives testified, as did a representative of the New York State Consumer Protection Board (the CPB). As part of his overview, the CPB representative noted that in 2004, the latest year for which data had been published, the Better Business Bureau reported that it received more complaints about wireless telephone service than it did for any other industry. Similarly, the National Association of Attorneys General reported that surveys over the past five years showed that complaints about wireless service were among the most frequently occurring categories of complaints. The CPB representative also noted that at the CPB the volume of complaints about wireless service had remained steady for the last several years, both in terms of absolute numbers and percentage of complaints. He estimated that two-thirds of consumer complaints concern billing or rate issues, with the remaining complaints concerning quality of service, dissatisfaction with industry responses to inquiries or complaints, and general lack of information about how and where to file a consumer complaint. With respect to billing, one o f the most common complaints has been that rates and fees are higher than consumers understood they would be at the time of purchase. As noted above, the specific provisions of the Act, especially up front disclosure, a formal consumer complaint process at the CPB, and the trial period ending 15 days after the first bill to the consumer, would address a substantial majority of the complaints described at the 2006 hearing.

Prior legislative history

Similar legislation was introduced as A.2030-A/S.3293-A (passed Assembly 2007, to third reading 2008); A.8539A/S.8501 (referred to Consumer Affairs and Protection 2005, passed Assembly 2006).

The current bill keeps important consumer protections afforded by the previously introduced bill, gives the Consumer Protection Board more flexibility about record-keeping and reporting related to consumer complaints about cell phone service, and strengthens the Consumer Protection Board's enforcement powers regarding violations of the bill's provisions.

Fiscal implications

To be determined.

Effective date

This act shall take effect 180 days after it shall have become a law; provided that the Consumer Protection Board is authorized, prior to the effective date, to promulgate rules and regulations and take any other measures necessary to implement the act on the effective date.