PAY-PER-CALL TELEPHONE SERVICE
(900 NUMBERS)

Calls to 900 telephone numbers, or pay-per-call services, are paid for by the caller. T charge is greater than, or added to, the carrier's charge for the transmission of the call. Under the 900 Number Rule adopted by the Federal Trade Commission , the 900 prefix became the only one through which interstate pay-per-call services could be offered, effective November 1, 1993. Pay-per-call services for local or intrastate calls often use other prefixes, such as 976 or 560. A 1992 survey found that between one-third and one-half of all adult Americans did not realize that they had to pay for calls to 900 telephone numbers.

Pay-per-call services offer a variety of audio information, audio entertainment, simultaneous voice conversations, and other services ranging from product offerings to personal dating services. The operator of a pay-per-call service is known as an information provider (IP). IPs determine the information or service to be provided, the amount of the charge, and whether it will be assessed on a per-call or time-interval basis, and how the service will be advertised. IPs typically use service bureaus to handle incoming calls.

PAY-PER-CALL APPLICATIONS

900 telephone numbers have a variety of applications. Since the caller pays a charge for making a 900 call, many IPs have established 900 services as money-making ventures. In the political arena, one of the first applications of the 900 number was to poll voters. Following the Reagan-Carter debates in 1980, viewers were given the opportunity to call one of two 900 numbers to cast a vote for the presidential candidate of their choice. Similarly, television networks have established 900 numbers to allow viewers to cast votes for programs that were scheduled to be canceled. Television programs airing rock videos have allowed viewers to call 900 numbers to cast their votes for their favorite videos. When an incentive was added to the call, one NBC program received more than 450,000 responses during a 90-minute show.

Since 900 telephone numbers are an effective means of establishing a caller's involvement, they have been used in marketing and sales promotion campaigns. These applications are not designed to make money from the 900 number. Rather, they are used to create an affinity between the consumer and a particular company or product. In one example, a record company offered a special CD and other merchandise to consumers who called a 900 number. In addition to the 900 charge, callers also paid for the merchandise, some of which could be obtained only by calling the 900 number.

The use of a 900 telephone number in a marketing or sales promotion campaign provides a variety of benefits. In terms of lead generation, 900 numbers provide better qualified leads than do toll-free numbers. If the marketer wants to create a mailing list or database of callers, it is easy to obtain the necessary information using the audiotext, or prerecorded message, feature of the 900 call. When 900 numbers are used in television advertising, they usually provide an indication of the response rate within minutes or hours. Finally, the charges associated with a 900 number can help the company recoup its promotional costs.

With the growing use and acceptance of prepaid phone cards, some companies have offered access to helplines and hotlines through both 900 pay-per call lines and prepaid phone cards. In early 1998 IBM established a helpline to answer questions about different types of software from a variety of vendors. A five-call plan cost about ten dollars and was offered through computer resellers, with consumers purchasing a prepaid phone card. Digital Equipment Corp. launched a similar service using a pay-by-the-minute format. Pay-per-call helplines providing technical support are common in the computer and software industry.

REGULATING PAY-PER-CALL SERVICES

As a result of widespread abuses of 900 telephone numbers by IPs, their use is now subject to regulation by the Federal Trade Commission (FTC) and the Federal Communications Commission (FCC). Under the authority of the Telephone Disclosure and Dispute Resolution Act of 1992, the FTC and FCC set up rules governing 900 numbers and pay-per call services effective November 1,1993. These rules apply to IPs, service bureaus, and carriers. They are limited to interstate services, but individual states may adopt and enforce more stringent regulations.

The FTC regulations cover the preamble, advertising disclosures and prohibitions, and billing rights and responsibilities. The preamble is an introductory message that a caller hears at the beginning of the call. It must include the name of the IP, a description of the service, the cost of the call, and a statement that gives the caller the opportunity to hang up within three seconds to avoid any charge. A preamble is not required when the call costs two dollars or less, or when it is made between data devices and no human is involved.

The FTC requires that all advertisements for pay-per-call services include the cost adjacent to the 900 number. In television advertising, both video and audio disclosures of the cost must be made, unless the ad is 15 seconds or less or contains no audio information about the 900 service. Either the total cost of the call must be given, or the cost per minute and any minimum charges. In the case of infomercials, the cost and other disclosures must be made at least three times during the infomercial—at the beginning, middle, and end.

For sweepstakes advertising that employs a 900 number, disclosures that must be made include the odds of winning and alternate methods of entry. Advertising a 900 service to children under 12 years of age is prohibited unless it is a bona fide educational service. Advertising aimed at individuals between 12 and 18 years of age must disclose that parental consent is required.

The FTC also created rules affecting billing rights and responsibilities, including the right of consumers to have 60 days from the date of billing to communicate errors to carriers. Toward the end of 1998 the FTC issued a proposal to add an additional provision aimed at stopping the growing practice of "cramming," or adding unauthorized charges to a phone bill. The new provision would give consumers the same rights in disputing telephone bill charges that they have when dealing with credit card companies. Under the proposed provision, consumers would be able to question any charge appearing on their bill, and the vendor would be required to provide proof of consumer authorization of the charge.

The FCC rules apply mainly to carriers. Consumers must be able to request their carriers block interstate 900 services. Carriers must also provide consumers with local or toll-free numbers from which to obtain information about 900 services. Carriers may not terminate telephone service for failure to pay for 900 calls. Both the FTC and the FCC will enforce a rule prohibiting callers from being charged for calls to an 800 number in any manner without a presubscription agreement.

The rules and regulations covering 900 telephone numbers are designed to protect consumers from fraudulent and deceptive practices. Such practices in the past have tarnished the image of 900 numbers, to some degree slowing their acceptance in the marketplace as legitimate marketing and sales promotion tools. There are many legitimate for-profit IPs providing 900 services. The future of 900 services is dependent on a number of factors that include consumer acceptance, the ability of the industry to police itself, and the effect of federal and state regulations on legitimate providers.