FCC Enforcement Bureau Settles with CenturyLink Over Alleged Unauthorized Third-Party Charges
On August 13, 2019, the FCC’s Enforcement Bureau announced that it settled a nearly three-year long investigation into whether CenturyLink included unauthorized charges from third-party service providers on customer bills. Also known as “cramming,” the assessment of unauthorized charges is a major source of consumer complaints and frequent focus of FCC enforcement actions. The CenturyLink Consent Decree follows in the wake of a handful of enforcement actions for cramming when accompanied by unlawful carrier switches (“slamming”) and the FCC’s adoption of new rules codifying its longstanding ban on cramming in 2018. The settlement underscores the responsibility borne by carriers for the chargers they place on customer bills – even for services they do not provide – and the need to maintain safeguards to ensure such charges are authorized. The Enforcement Bureau began its investigation of CenturyLink back in 2016, focusing on charges included on customer bills for services provided by third-party resellers. Consumers alleged that they never authorized such charges and encountered challenges when seeking refunds with CenturyLink. Under the Consent Decree, CenturyLink agreed to pay $550,000, to cease nearly all third-party billing, and to implement a refund process for affected customers. The settlement with CenturyLink is notable for several reasons. First, this is the first pure cramming case of current Enforcement Bureau Chief Rosemary Harold’s tenure, and the first one involving third-party charges since a series of actions against major carriers between 2014 and 2016. Prior enforcement actions under this Bureau Chief have addressed entities that engaged in both slamming and cramming. In those cases, the accused carrier was billing its own charges and was accused of cramming because the underlying switch was itself unlawful, meaning that the charges were not authorized. The CenturyLink action, by contrast, returns to carrier billing of third-party charges. Third-party charges on telephone bills have been controversial since at least 2011, and the investigation here once again proceeded on the theory that improper billing of third-party charges can be an unjust and unreasonable practice under Section 201(b) of the Communications Act. Along with the 2018 rule change adding cramming as a rule violation, the Commission’s action underscores that carriers have a responsibility to ensure that third-party charges placed on telephone bills are properly authorized. Second, many of the compliance plan obligations in the CenturyLink Consent Decree will last for four years (instead of the regular three-year term), likely reflecting the long-term structural changes to billing processes required from the company. Finally, unlike past Consent Decrees under the previous Enforcement Bureau Chief, the CenturyLink settlement contains no admission of liability by the company and instead affirmatively states that it does not represent any finding of noncompliance. This suggests that the former Bureau Chief’s steadfast (and controversial) insistence on admissions in prior FCC settlement negotiations may be waning and that the current Enforcement Bureau may be more open to consider alternative Consent Decree provisions in cramming-related and other enforcement actions in the future.