FOR YOUR INFORMATION..........................July 8, 1991


         THE STAFF OF THE FTC ENDORSES THE FCC'S EFFORTS
             TO FOSTER INFORMED CONSUMER CHOICES IN 
                     THE 900-NUMBER INDUSTRY


     The staff of the Federal Trade Commission endorses the
efforts of the Federal Communications Commission (FCC) to foster
informed consumer choices and provide appropriate consumer
protections in the 900-number industry, according to a staff
comment filed July 2 in response to the FCC's Notice of Proposed
Rulemaking Concerning 900 numbers.  The staff comment concludes
that remedies currently being considered by the FCC in its
proposed rulemaking, such as mandatory preambles, optional
blocking, and identification of information providers, could give
meaningful protection to consumers.  The staff comment also notes
that the FCC's rulemaking is consistent with continued
enforcement activity by other regulatory agencies, such as the
FTC, because the FCC's regulatory authority is limited to common
carriers (in this case, the phone companies).
     Initially, 900-services which are caller-paid services, were 
limited to sports lines, "dial-a-joke," "dial-a-prayer," and
weather and time reports.  More recently, caller-paid services
have expanded into a host of new areas, including use as a means
of marketing directly to consumers.  Although most 900-services
are legitimate operations, unscrupulous operators can and have
used this new technology to engage in fraud or deception, the
staff said.

                            - more -


FCC-900--07/08/91)


     After reviewing the FTC's experience with the 900-number
industry, the staff comment gives a general analysis of the
various remedies being considered by the FCC.  The staff's
experience with the industry stems, in large part, from a number
of recent investigations of 900-number information providers. 
The FTC has filed a number of complaints about 900-number
services.  Four complaints have been filed in Federal court, one
of which resulted in a settlement requiring defendants to pay $1
million in consumer redress.  In addition, the Commission
provisionally accepted two consent agreements and issued one
administrative complaint against companies who provide 900-number
services directed at children.  Based on these recent
investigations, the staff comment identifies three distinct
classes of consumer problems:  (1) the lack of adequate cost
information prior to being charged for the call; (2) the failure
to receive the goods or services promised in the solicitation;
and (3) charges for unauthorized calls, such as those made by
children.  The staff said that distinguishing among these
problems is important because they require different remedial
approaches.

     With some suggested changes, the FTC staff said it generally
endorses the FCC's proposed regulations that would (1) require a
preamble or introductory message disclosing the cost and nature
of the call at the beginning of the call, thus helping to ensure
that consumers receive cost information prior to being charged
for 900-service calls; (2) permit consumers to prevent
unauthorized calls to 900-numbers by blocking access to them; and
(3) make it easier for consumers to obtain relief when they
believe the charges on their phone bills are unwarranted.  

     The staff comment discusses the protections now available to
credit card users under the Fair Credit Billing Act (FCBA), which
provides a means for consumers to dispute charges on their credit
card bills.  While the FCBA does not cover 900-number
transactions, some callers to 900-numbers have encountered
similar kinds of billing disputes.  The FCC may wish to consider
whether provisions resembling those under the FCBA would be
feasible and cost-effective if applied to the 900-number
industry, should other remedies not address the situation, the
staff said.


FCC-900--07/08/91)


     The comment was written by the staff of the Bureaus of
Consumer Protection and Economics of the Federal Trade
Commission.  Its views do not necessarily represent those of the
Commission or an individual Commissioner.

     Copies of the staff comment are available from the FTC's
Public Reference Branch, Room 130, 6th Street and Pennsylvania
Avenue, N.W., Washington, D.C.  20580; 202-326-2222; TTY 202-326-
2502.

                              # # #

MEDIA CONTACT:      Brenda A. Mack, Office of Public Affairs,
                    202-326-2182

STAFF CONTACT:      Timothy Daniel, Bureau of Economics,
                    202-326-3520

                    Lydia Parnes, Bureau of Consumer Protection,
                    202-326-3126


(FCC-900)