Marketing Practices and Consumer Protections

Background

Some consumers purchase voice service as a “stand-alone” telecommunications service, sometimes buying a few additional features such as call forwarding on an “à la carte” basis. Other consumers purchase voice service as part of a “bundled” offering that may include broadband Internet access, television service, and optional features such as call forwarding and caller identification.

The primary (and often only) providers of wireline telecommunications services are the traditional phone companies and the cable companies. Within most communities, households can choose between only two wireline providers—the incumbent local-exchange carrier and the cable company that has been awarded the franchise to serve that community. Consumers also can choose from among various wireless providers to supplement or to replace their wireline phone service.

In the wake of the Telecommunications Act of 1996, increased competition among telecommunications companies has led to aggressive marketing. In some cases, local-exchange companies have engaged in fraud and improper marketing practices affecting thousands of customers. For example, some companies have marketed inside-wire maintenance to apartment owners, who often have no authority or responsibility for upkeep. Telecommunications companies may also attempt to “upsell” services and in so doing may be aggressive or deceptive in their effort to sell bundled services. Some telecommunications companies are in the process of gradually retiring their copper plant and migrating their customers to fiber-based services. During this transition, telecommunications companies may attempt to sell fiber-based bundles of voice, broadband Internet access, and video services to replace customers’ basic local voice service.

Marketing Practices and Consumer Protections: Policy

Protecting consumers

In this policy: State

States should ensure that telecommunications service providers are subject to statutes governing unfair and deceptive acts and practices and to consumer protection laws that forbid fraudulent or misleading marketing practices.

States also should:

  • provide meaningful remedies for fraudulent and deceptive marketing;
  • require telephone companies to provide consumers with the necessary information to obtain the company’s most economical service or services to meet their needs;
  • restrict the marketing or upselling of optional services when a consumer calls to inquire about essential service so that only basic information about the option’s availability and price are provided;
  • prohibit telephone companies from changing a monthly billing cycle to another billing period unless the customer agrees in writing to such a change; and
  • ensure that service providers clearly and conspicuously present inside-wire maintenance as an addition to basic service and only under stringent advertising guidelines.