Carriers Falling Short on Preventing Bill Shock, Genachowski Says
Wireless “bill shock” is not a small matter and many consumers have been hit with massive charges they didn’t expect when they opened their monthly bills, FCC Chairman Julius Genachowski said at a Center for American Progress event Wednesday. On the eve of an FCC vote on a rulemaking notice on whether the FCC should impose warning requirements on carriers, Genachowski took the agency’s stand against bill surprises directly to the public.
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Two-thirds of the complaints the FCC has received on wireless bills dispute charges of $100 or more, and 20 percent involve more than $1,000, Genachowski said. The largest complaint was $68,505, the agency said in a white paper it released Wednesday, which also said 764 people complained to the FCC the first half of the year about bill surprises. “In an era when 300 page bills are within the realm of possibility, it’s hard to keep track of everything you're being charged and too easy to find yourself paying more than you had planned on,” he said. “Companies should compete on value, price and service, not consumer confusion.”
Steps carriers have taken on their own to notify consumers when they're about to incur overage charges are not enough, Genachowski said. “They're the exception, not the rule,” he said. “They're not helping consumers consistently, as evidenced by the tens of millions of bill shock victims that keep coming up in survey after survey.”
The NPRM is expected to be approved 5-0, though at least one commissioner’s office has questions about the extent of the problem faced by consumers, FCC officials said. The rulemaking defines wireless “bill shock” as sudden increases in a subscriber’s bill not caused by changes in a monthly service plan, and says bill shock is a “significant burden” for millions of Americans (CD Oct 6 p1).
Genachowski appeared with three wireless subscribers who experienced bill shock, at Wednesday’s event. Genachowski also did some interviews earlier in the week with major news outlets, including ABC News and The New York Times, to make a case for FCC action against bill shock, an unusual media blitz for an FCC chairman prior to a vote on a pending item.
Robert St. Germain, a retired Dover, Mass., marketing consultant, said he was hit by $18,000 in bills from Verizon Wireless after a free trial on mobile data downloads expired. “My situation has been going on for four years,” St. Germain said. His story eventually made the national news this spring and the FCC started to investigate, he said. “I got a call, finally, after four years, from someone who could make a decision,” he said. “He said, ‘What can we do for you? Everything will be taken care of.’ … And it all got taken care of.”
Kerfye Pierre, a FEMA employee from Hyattsville, Md., received a $35,000 bill from T-Mobile after she used her phone to send text messages while she was visiting family in Haiti following that country’s massive earth quake. Pierre misunderstood the carrier’s offer of free calls from the nation. She was told when she called to complain that only voice was free. “In Haiti, communications was totally gone,” she said. “The only way I was communicating was through my text messages because the phone calls were dropping.” Eventually, the bill was lowered to $5,000, she said.
Genachowski, who had named former Consumers Union official Joel Gurin chief of the Consumer and Government Affairs Bureau, said Wednesday that he has always seen protecting consumers as one of the top priorities of the FCC. Genachowski said the FCC will hold a public forum on unexpected phone charges and related issues. The FCC must be a “cop on the beat” to protect consumers, he said.
"The more devices we buy, the more services we subscribe to, the more perplexing it can be for consumers,” Genachowski said. “Instead of tracking minutes used, something intuitive, consumers are being asked to track megabytes of data consumed. How many people even know what a megabyte is and can track it in their heads.”
Some consumers, meanwhile, have received 300-page phone bills “as many of you might have seen on a well-circulated YouTube clip,” he said. “It gives you a pretty good sense of how consumers are entering unchartered waters.”
"We are constantly working to keep all of our 292.8 million subscribers happy, and we will do more,” said Chris Guttman-McCabe, regulatory vice president at CTIA, in response to Genachowski. “We agree with the FCC that the goal is to keep all customers happy, but we are concerned that prescriptive and costly rules that limit the creative offerings and competitive nature of the industry may threaten to offset these positive trends."
But Sen. Tom Udall, D-N.M., author of bill shock legislation, said the FCC appears to be on the right track based on Genachowski’s comments. “Requiring providers to notify customers before they exceed their monthly limits is a commonsense step to help users avoid doubling and tripling their bills."
"People are being blind-sided by unexpected charges on their wireless phone bill,” Consumers Union said. “Smartphones have become much more sophisticated, so we ought to have a more sophisticated way to tell people they're about to go over their limits.”