44TH LEGISLATURE - STATE OF NEW MEXICO - FIRST SESSION, 1999

RELATING TO TELECOMMUNICATIONS; CREATING CRIMES; ENACTING THE CRAMMING AND SLAMMING ACT; PRESCRIBING POWERS AND DUTIES OF THE PUBLIC REGULATION COMMISSION; PROHIBITING CERTAIN PRACTICES; PROVIDING FOR REVOCATION OF A CERTIFICATE OF AUTHORITY OR CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY FOR CERTAIN ACTS; MAKING CERTAIN ACTIONS SUBJECT TO THE UNFAIR PRACTICES ACT; PRESCRIBING CRIMINAL AND ADMINISTRATIVE PENALTIES; AMENDING AND ENACTING SECTIONS OF THE NMSA 1978.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

Section 1. A new section of the Criminal Code is enacted to read:

"[NEW MATERIAL] TELECOMMUNICATIONS FRAUD--UNAUTHORIZED CHANGE IN TELECOMMUNICATIONS PROVIDER--UNAUTHORIZED CHARGES ON TELEPHONE BILL.--

A. As used in this section:

(1) "billing aggregator" means a person that bills customers for telecommunications services or telecommunications and nontelecommunications services that are provided by others;

(2) "customer" means the person whose name appears on the telephone bill or the person who is responsible for payment of the telephone bill;

(3) "telecommunications provider" means a telephone company, transmission company, telecommunications common carrier, telecommunications company, cellular or other wireless telecommunications service company, cable television service or telecommunications reseller; and

(4) "telecommunications service" means the transmission of signs, signals, writings, images, sounds, messages, data or other information of any nature by wire, radio, lightwaves or other electromagnetic means.

B. It is unlawful for a telecommunications provider or billing aggregator to:

(1) intentionally charge a customer for telecommunications services or other services that were not authorized by the customer; or

(2) intentionally change a customer's telecommunications provider or bill a customer for a change in telecommunications provider without prior authorization for the change from the customer.

C. A telecommunications provider or billing aggregator shall be held responsible for the actions of its employees, affiliates, agents and contractors.

D. A telecommunications provider or billing aggregator that violates the provisions of Subsection B of this section is guilty of a misdemeanor and upon conviction shall be punished by a fine of not more than one thousand dollars ($1,000) for each unauthorized charge or change in telecommunications provider."

Section 2. [NEW MATERIAL] SHORT TITLE.--Sections 2 through 11 of this act may be cited as the "Cramming and Slamming Act".

Section 3. [NEW MATERIAL] DEFINITIONS.--As used in the Cramming and Slamming Act:

A. "commission" means the public regulation commission;

B. "cramming" means intentionally charging a customer for telecommunications services that were not authorized by the customer;

C. "customer" means the person whose name appears on the telephone bill or the person who is responsible for payment of the telephone bill;

D. "local exchange service" means the transmission of two-way interactive voice communications within a local exchange area described in maps, tariffs or rate schedules filed with the commission where local exchange rates apply;

E. "slamming" means intentionally changing a customer's telecommunications provider or billing a customer for a change in telecommunications provider without prior authorization for the change from the customer;

F. "telecommunications provider" means a telephone company, transmission company, telecommunications common carrier, telecommunications company, cellular or other wireless telecommunications service company, cable television service or telecommunications reseller;

G. "telecommunications service" means the transmission of signs, signals, writings, images, sounds, messages, data or other information of any nature by wire, radio, lightwaves or other electromagnetic means or goods and services related to the transmission of information that are provided by the telecommunications provider, but a good or service that does not meet the definition of "telecommunications service" does not become a telecommunications service merely because it is bundled with a telecommunications service for marketing or billing purposes; and

H. "unauthorized charge" means a charge for a telecommunications service that a customer did not order, but does not include a charge for the use of an authorized telecommunications service.

Section 4. [NEW MATERIAL] TELECOMMUNICATIONS PROVIDERS--LIABILITY--COMMISSION ENFORCEMENT--REMEDIES NOT EXCLUSIVE.--

A. A telecommunications provider may be held liable for the actions of its employees, affiliates, agents and contractors.

B. The commission shall enforce the provisions of the Cramming and Slamming Act against a telecommunications provider regulated in whole or in part by the commission or against a telecommunications provider over whom the commission is given regulatory authority by state or federal law.

C. Nothing in the Cramming and Slamming Act affects any other remedies available in law.

Section 5. [NEW MATERIAL] CHANGE IN SERVICE OR PROVIDER--TELEPHONE BILLS.--

A. A charge for telecommunications service or a change in telecommunications provider shall be conspicuously indicated on the customer's telephone bill in clear, unambiguous language and easily legible type. New telecommunications services or a new telecommunications provider shall be clearly indicated as "new" on the telephone bill. Charges for local exchange service shall be itemized separately from charges for other telecommunications services.

B. Charges for goods or services that are not a telecommunications service shall not be included on a customer's telephone bill. Inclusion of those charges on a customer's telephone bill is cramming.

C. If a customer disputes a charge or change in telecommunications provider, the billing telecommunications provider shall require verification from the initiating telecommunications provider that the charge or change in telecommunications provider was authorized by the customer before attempting to collect for the charge or change. The billing telecommunications provider shall not prorate a customer's payment to include a disputed charge or change until it has been verified.

D. A local exchange service provider shall not disconnect or threaten to disconnect a customer's local exchange service because the customer refuses to pay for cramming or slamming.

Section 6. [NEW MATERIAL] SALES TO BE IN CLEAR LANGUAGE--FALSE OR MISLEADING INFORMATION--VERIFICATION--UNAUTHORIZED CHARGE OR CHANGE--WRITTEN NOTIFICATION.--

A. As used in this section, "seller" means a telecommunications provider or other person that sells telecommunications services.

B. The telecommunications provider shall approve all sales scripts and written materials used by sellers.

C. A seller that attempts to persuade a customer to purchase telecommunications services or change his telecommunications provider shall make adequate inquiry to reasonably ensure that he is talking to the customer and not someone who cannot authorize a telecommunications service or change in telecommunications provider. The seller shall also, at a minimum, clearly and unambiguously:

(1) identify himself and the company for which he works;

(2) identify the telecommunications provider that he is asking the customer to use or the telecommunications service he is asking the customer to purchase; and

(3) explain the material terms and price of the purchase or change in telecommunications provider.

D. A seller shall not use false or misleading information or tactics that would be considered by a prudent person to be pressure tactics to convince the customer to purchase a telecommunications service or change a telecommunications provider.

E. When a seller contacts a customer by telephone solicitation to sell a telecommunications service or change in telecommunications provider, the seller shall provide for third-party verification that clearly and unambiguously restates the agreed-upon material terms and price of the purchase or change. A copy of the agreement shall be mailed to the customer within seventy-two hours.

F. When selling through a written medium, the seller shall ensure that the entire written agreement the customer signs is in an easily readable format and font and explains the material terms and price of the telecommunications service to be provided. The written agreement cannot differ substantively from the oral sales discussion with the customer. A copy of the signed agreement shall be provided to the customer at the time the customer signs the agreement.

G. If the provisions of this section are not complied with, the telecommunications provider is deemed to have billed for an unauthorized charge or unauthorized change in telecommunications provider.

Section 7. [NEW MATERIAL] UNAUTHORIZED CHARGES--DELETION FROM BILL OR PAYMENT--HOLD HARMLESS--FAILURE TO PAY CONSTITUTES CRAMMING.--

A. When notified by a customer of a claimed unauthorized charge on his telephone bill, the telecommunications provider that submitted the charge has three business days to investigate the claim and make a determination. If the charge is found to have been authorized and is correct, the telecommunications provider may sustain the charge. If the charge is found to have been unauthorized, the telecommunications provider shall:

(1) if the customer did not pay the unauthorized charge, notify the billing telecommunications provider to delete the charge from the customer's telephone bill and hold the customer harmless for any costs associated with the unauthorized charge;

(2) if the customer paid the unauthorized charge, hold the customer harmless for any costs associated with the unauthorized charge and either return the amount paid or credit the customer's telephone bill as the customer chooses; and

(3) pay to the billing telecommunications provider the administrative costs of changing the customer's telephone bill.

B. Failure to promptly delete an unauthorized charge or pay the costs of an unauthorized charge constitutes cramming.

Section 8. [NEW MATERIAL] UNAUTHORIZED CHANGE IN PROVIDER--AUTOMATIC SWITCHBACK AND PAYMENT--HOLD HARMLESS--FAILURE TO PAY CONSTITUTES SLAMMING.--

A. When notified by a customer of a claimed unauthorized change in telecommunications provider, the telecommunications provider that benefited from the change has three business days to investigate the claim and make a determination. If the change is found to have been authorized and is correct, the telecommunications provider may sustain any charges for telecommunications services used by the customer, and it shall switch the customer back to his previously selected telecommunications provider. If the change is found to have been unauthorized, the telecommunications provider shall:

(1) switch the customer back to the previously selected telecommunications provider;

(2) hold the customer harmless for any switching fees or other costs, the value of any lost premiums to which the customer would have been entitled and, if the customer paid the unauthorized telecommunications provider for telecommunications services, either return the amount paid or credit the customer's telephone bill as the customer chooses;

(3) pay to the authorized telecommunications provider the cost of billed charges and hold that telecommunications provider harmless for the cost of switching fees, administrative costs or other costs incurred because of the unauthorized change, if the customer did not pay for charges billed by the unauthorized telecommunications provider; and

(4) pay to the billing telecommunications provider the administrative costs of changing and reinstating the customer's telecommunications provider.

B. Failure to promptly switch a customer back to his authorized telecommunications provider or to pay the costs of an unauthorized change of telecommunications provider constitutes slamming.

Section 9. [NEW MATERIAL] SWEEPSTAKES AND CONTEST ENTRY FORMS--USE CONSTITUTES CRAMMING OR SLAMMING.--A telecommunications provider shall not use a sweepstakes, contest or drawing entry form as authorization to change or add telecommunications services to a customer's telephone bill or change a customer's telecommunications provider. Use of such form constitutes cramming or slamming, as applicable.

Section 10. [NEW MATERIAL] CRAMMING OR SLAMMING PROHIBITED--COMPLAINTS FILED WITH COMMISSION--ADMINISTRATIVE PENALTIES.--

A. Cramming or slamming is prohibited.

B. A customer or a telecommunications provider may file a complaint with the commission alleging cramming or slamming by a telecommunications provider.

C. Complaints shall be in a form prescribed by the commission. The commission shall provide by rule for the filing, investigation and hearing of complaints filed in accordance with the provisions of the Cramming and Slamming Act. The rules shall provide for adequate notice to the complainants and the telecommunications provider and shall provide both an opportunity to be heard. The commission may combine complaints filed against the same telecommunications provider.

D. If the commission finds after investigation and hearing that a telecommunications provider engaged in cramming or slamming, it may:

(1) assess an administrative penalty not to exceed ten thousand dollars ($10,000) for each occurrence of cramming or slamming; or

(2) suspend or revoke the telecommunications provider's certificate of authority or certificate of public convenience and necessity for a deliberate and pervasive pattern of cramming or slamming.

E. A person aggrieved by an order of the commission may appeal the order to the district court as provided in Section 39-3-1.1 NMSA 1978.

F. The administrative penalty provided for in this section is in addition to any other penalties that may be imposed pursuant to any other state law.

Section 11. [NEW MATERIAL] DEFENSE.--It is a defense for the telecommunications provider to show through the use of tape recordings, signed agreements, third-party verification that meets federal requirements or other means that the customer knowingly authorized the purchase of telecommunications services or the change in telecommunications provider.

Section 12. Section 57-12-2 NMSA 1978 (being Laws 1967, Chapter 268, Section 2, as amended) is amended to read:

"57-12-2. DEFINITIONS.--As used in the Unfair Practices Act:

A. "person" includes, where applicable, natural persons, corporations, trusts, partnerships, associations, cooperative associations, clubs, companies, firms, joint ventures or syndicates;

B. "seller-initiated telephone sale" means a sale, lease or rental of goods or services in which the seller or his representative solicits the sale by telephoning the prospective purchaser and in which the sale is consummated entirely by telephone or mail, but does not include a transaction:

(1) in which a person solicits a sale from a prospective purchaser who has previously made an authorized purchase from the seller's business; or

(2) in which the purchaser is accorded the right of rescission by the provisions of the Consumer Credit Protection Act, 15 U.S.C. 1635 or regulations issued pursuant thereto;

C. "trade" or "commerce" includes the advertising, offering for sale, sale or distribution of any services and any property and any other article, commodity or thing of value, including any trade or commerce directly or indirectly affecting the people of this state;

D. "unfair or deceptive trade practice" means any false or misleading oral or written statement, visual description or other representation of any kind knowingly made in connection with the sale, lease, rental or loan of goods or services or in the extension of credit or in the collection of debts by any person in the regular course of his trade or commerce, which may, tends to or does deceive or mislead any person and includes but is not limited to:

(1) representing goods or services as those of another when the goods or services are not the goods or services of another;

(2) causing confusion or misunderstanding as to the source, sponsorship, approval or certification of goods or services;

(3) causing confusion or misunderstanding as to affiliation, connection or association with or certification by another;

(4) using deceptive representations or designations of geographic origin in connection with goods or services;

(5) representing that goods or services have sponsorship, approval, characteristics, ingredients, uses, benefits or quantities that they do not have or that a person has a sponsorship, approval, status, affiliation or connection that he does not have;

(6) representing that goods are original or new if they are deteriorated, altered, reconditioned, reclaimed, used or secondhand;

(7) representing that goods or services are of a particular standard, quality or grade or that goods are of a particular style or model if they are of another;

(8) disparaging the goods, services or business of another by false or misleading representations;

(9) offering goods or services with intent not to supply them in the quantity requested by the prospective buyer to the extent of the stock available, unless the purchaser is purchasing for resale;

(10) offering goods or services with intent not to supply reasonable expectable public demand;

(11) making false or misleading statements of fact concerning the price of goods or services, the prices of competitors or one's own price at a past or future time or the reasons for, existence of or amounts of price reduction;

(12) making false or misleading statements of fact for the purpose of obtaining appointments for the demonstration, exhibition or other sales presentation of goods or services;

(13) packaging goods for sale in a container that bears a trademark or trade name identified with goods formerly packaged in the container, without authorization, unless the container is labeled or marked to disclaim a connection between the contents and the trademark or trade name;

(14) using exaggeration, innuendo or ambiguity as to a material fact or failing to state a material fact if doing so deceives or tends to deceive;

(15) stating that a transaction involves rights, remedies or obligations that it does not involve;

(16) stating that services, replacements or repairs are needed if they are not needed; [or]

(17) failure to deliver the quality or quantity of goods or services contracted for; [and]

(18) misrepresenting the terms, conditions or price of an offer to change a person's telecommunications provider or change or add telecommunications service; or

(19) making false or misleading statements or otherwise misrepresenting or deceiving a person in order to have the person change his telecommunications provider or agree to a change or addition to telecommunications service; and

E. "unconscionable trade practice" means any act or practice in connection with the sale, lease, rental or loan, or in connection with the offering for sale, lease, rental or loan, of any goods or services or in the extension of credit or in the collection of debts which to a person's detriment:

(1) takes advantage of the lack of knowledge, ability, experience or capacity of a person to a grossly unfair degree; [or]

(2) results in a gross disparity between the

value received by a person and the price paid; or

(3) results in an unauthorized change in the person's telephone provider or an unauthorized change or addition to telecommunications service."