Telephone abuse

March 20, 1991

New technologies always hold the potential for abuse, but the growth of 900-number phone services -- in which customers pay a fee for each call -- is producing an angry consumer backlash. That backlash, in turn, could easily produce regulation that would strangle legitimate aspects of this rapidly growing business.

900 numbers are useful for obtaining information, as well as for fund raising or polling services. The Red Cross has used them to provide information about earthquakes and hurricanes. But for many consumers these legitimate uses seem outnumbered by scams like the Seattle television advertisement that told children they could call Santa Claus simply by holding the telephone up to the TV. The television speaker then emitted tones that dialed a 900 number -- and the charges showed up on the parents' bill. No wonder 900-service complaints are fast becoming the biggest issue facing the Federal Communication Commission, which shares federal jurisdiction in these cases with the Federal Trade Commission and the U.S. Postal Service.

At least two bills to rein in 900-number abuses are pending in Congress. But the FCC may have taken away some of the impetus for legislation last week when it announced proposed new rules for 900-number services. The proposals include one that has the fledgling industry particularly alarmed, a requirement that any 900-number call begin with a preamble explaining to a caller the price of the call as well as the product or service it offers. For those aimed at children, the preamble would tell the child to obtain parental permission for the call or hang up. Entrepreneurs in 900-number services fear that the disclosure requirements would prompt too many hang-ups. It seems more likely, however, that many callers would just consider them a nuisance. And what parent would agree that a message warning children to obtain permission for the call is an effective deterrent?

More promising are other proposals to assure telephone customers the option of blocking all 900-number calls and to protect consumers from having telephone services disconnected for failure the pay 900-number service charges.

Ideally, the best balance between protection for consumers and the development of legitimate aspects of the industry would come from the industry's determination to police its own ranks and weed out schemes that encourage fraud and abuse. Failing that, the industry better prepare for regulations -- some of which it is sure not to like.

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