Agenda Date: February 11, 1998
Agenda Item:

Docket: UT-971469
Rules relating to prepaid telephone services.

Staff:  Mary Taylor, Consumer Program Specialist
  Vicki Elliott, Consumer Affairs Manager
  Fred Ottavelli, Program Consultant
  Bob Wallis, Review Judge


Recommendation:
Direct the Secretary to file a proposal statement of inquiry (CR-101) in Docket 
No. UT-971469.

Discussion
The Commission does not currently have rules which speak directly to prepaid 
telephone services. Prepaid telephone services would include, but are not 
necessarily limited to, items such as telephone debit cards.   Debit cards are 
sold in various denominations and allow the card holder to place calls by 
dialing an access code and authorization code.  As calls are placed using the 
card, the charges for the completed calls are deducted from the prepaid amount 
of the card until it is depleted.  Typical users of debit cards may include 
individuals that are traveling away from home; individuals that do not have 
their own telephone service; and students.  

Debit cards are a fairly new product offered to the general public only in the 
last several years. Staff is aware of a number of problems that have recently 
surfaced regarding prepaid services such as debit cards.  In particular, staff 
has received informal complaints which indicate that many consumers are not 
fully informed and, therefore do not understand, consumer and company rights 
and responsibilities for debit card purchase and use; consumers with problems 
or concerns are not able to contact the carrier; and advance payments are not 
adequately protected by current performance bond guidelines.

Staff has identified general categories that may be included in the proposed 
rulemaking, designed to address these problems:

•Develop a definition of prepaid services.

•Ensure adequate disclosure to the consumer:
1) The requirement that carriers be required to disclose, at the time of 
purchase of debit card, the underlying carrier’s name and toll free number; a 
description of the calling area capabilities; and an explanation of the rate 
structure, expiration and recharge policy and call timing and rounding policy.
2) The requirement that end users be informed of the time remaining on each 
card at the beginning and end of each call; and notified when the card 
approaches depletion.


Docket UT-971469
February 11, 1998
Page 1

•Ensure adequate access to the carrier:

The requirement that carriers provide a toll-free number for consumer access; 
and a contact name and number for Commission staff.  This requirement would 
include an appropriate level of company staff so that access is timely.

•Ensure protection of advance payments:
While the recommendations in this section have not been developed, staff will 
consider how the Commission will establish and monitor adequate financial  
resources of interexchange carriers or in the alternative assure maintenance of 
trust accounts or performance bonds sufficient to cover any customer advances 
or deposits.

•Explore the need for limiting debit card denominations:
Staff has not made recommendations in this area, but will consider limiting the 
denominations of cards sold within our state by rule.  Currently, staff relies 
on a policy that limits residential debit cards to $50 and business cards to 
$200.

Staff will schedule stakeholder meetings and/or workshops and provide 
opportunity for written comments as the rulemaking progresses.