Panel backs ban on misleading phone charges

Posted Feb. 26, 2009, at 9:43 p.m.

AUGUSTA, Maine — Those often irritating charges on your phone bill for an “administrative fee” or “regulatory recovery fee” would be banned under a measure endorsed by the Legislature’s Utilities Committee on Thursday.

“This will close the last remaining loophole concerning your phone bill,” Rep. Herb Adams, D-Portland, sponsor of the measure, said in an interview after the committee vote. “Charges that do not represent a real charge of any kind, in other words a fake fee, will be illegal to put on a bill.”

Adams serves on the committee and said many lawmakers have expressed concern over fees on their bills that appear to be required by state or federal law when they are not.

For example, the fee funding 911 emergency service is required by state law and is listed separately on telephone bills. However, a phone company’s administrative fees are not required by law and, Adams says, should not be listed among those fees that are.

There are 200 phone companies operating in Maine, according to the state’s public advocate.

Rep. David Van Wie, D-New Gloucester, said phone companies often use the “made-up” fees as part of a marketing ploy. He said an example is the advertised $9.99 charge for a second phone that increases by another dollar or two because of added fees to pay what he called “the usual cost of doing business” but appear to the consumer to be fees required by law.

“If it is not a tax or a regulatory fee, it should not be listed on the bill,” he said.

Other panel members agreed and had their own examples of what they said was “misleading” language on phone bills that added to the bottom-line cost of the phone service.

Rep. Sean Flaherty, D-Scarborough, suggested an amendment that was approved that will have the phone companies report annually to the Public Advocate’s Office on the charges that they itemize on bills.

“This is a way to keep track of what is going on out there,” he said, “It won’t prevent further abuses, but it will allow the advocate to keep up with what is happening.”

Public Advocate Richard Davies told the panel his office would be pleased to collect the information, even though enforcement of the measure would be the responsibility of the Public Utilities Commission and the Attorney General’s Office.

“We are essentially the consumer protection wing of utility regulation in this state,” he said. “It does make sense that we collect this information to address problems as they may develop.”

Davies said his agency regularly receives consumer complaints about questionable fees on phone bills and believes there is a problem. But, he said, without data collection it will be hard to figure out the scope of the problem and whether lawmakers may need to take further action to address the issue.

Ben Sanborn, lobbyist for the Telephone Association of Maine, said the additional reporting requirement would “cause us some work” but said it could be done.

“There is a cost to developing this list,” he said. “It is not something we do right now. There may be fees we may have for specific promotions during the year that only are listed for a few months and not the whole year.”

Adams said it is not Maine-based companies he is worried about. He said in drafting the legislation he found few problems with the way they listed fees, but found serious problems with out-of-state companies doing business in the state.

“If this becomes law, they will have to follow our law in order to do business in our state,” he said. “It will protect consumers from these fake fees on their phone bills that many are seeing today.”

Adams said under the measure the PUC could fine a company up to $1,000 for each bill that has an outlawed charge listed on it. In addition, he said, continued violation could lead to legal action by the attorney general for violation of the Maine Fair Practices Act.

“I think a thousand dollars fine for every illegal fee listed on every consumer bill they send out to a Maine consumer will get their attention,” he said.

The measure was supported by the 12 members of the committee present for the Utilities Commission work session. The bill now will go to the full Legislature for its consideration.

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