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

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 unen- forceable; 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 prac- tices 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 provider 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 unau- thorized 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.