Chapter 8. Consumer Protection

• Pages: 395-425

395

CHAPTER VIII

CONSUMER PROTECTION TRENDS

A. Introduction

Antitrust and consumer protection laws share a common goal of

fostering consumer choice but approach the marketplace from different

perspectives. The procompetitive economic policies underlying antitrust

laws promote consumer choice by protecting competition, not individual

competitors or consumers. In contrast, consumer protection laws focus

on the behavior of particular competitors and consumers and promote

consumer choice by prohibiting coercion and deception in the

marketplace.

The legal structure for a competitive telecommunications

marketplace evolved piecemeal until the enactment of the

Telecommunications Act of 1996.1 Before the 1996 Act, separate

judicial, administrative, and legislative actions at both federal and state

levels shaped the deregulatory process. As a consequence, consumer

safeguards largely developed in response to deregulatory changes that

were intended to promote competition but that had the unintended effect

of making possible the use of coercive and unfair practices against

consumers.

This chapter identifies major consumer protection issues in the

deregulatory process. Broadly considered, consumer protection analysis

could include most regulatory measures affecting commerce, but this

chapter will focus on efforts to curtail unfair and coercive practices that

deprive or limit a consumer’s right and ability to choose among products

and services. Particular practices will be described along with the

responses implemented by federal and state authorities and consumers.

Finally, the legacy of tariffs, the filed rate doctrine, and other residual

regulatory policies and in particular their effect on remedies for coercive

and unfair practices, will also be discussed.

1. Pub. L. No. 104-104, 110 Stat. 56 (1996), codified at 47 U.S.C. § 151 et

seq. [hereinafter 1996 Act].

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B. Consumer Protection in the Telecommunications Marketplace

The telecommunications industry’s transition to a deregulated,

competitive marketplace necessarily involved a restructuring of

consumer safeguards afforded in this previously regulated, monopolistic

market. Before deregulation, federal and state administrative agencies

comprehensively oversaw telecommunications industry practices.

Consumer protection in the regulated telecommunications marketplace

was a function of several factors. First, economic rate review was

designed to make reasonably priced services available on a

nondiscriminatory basis. Second, service terms and conditions in filed

tariffs (performing the function of contracts in a competitive

marketplace) were required to be just and reasonable so as to preclude

coercive, unfair and deceptive practices. Third, government regulatory

agencies used their comprehensive authority to address consumer

complaints of unsatisfactory service and repair problems, unfair

practices, deceptive advertising, and billing disputes.

The regulated telecommunications industry may have offered limited

consumer choices, but it also restricted the opportunity for coercion and

deception. Deregulation decreased barriers to entry, reduced legal

restraints, and opened the telecommunications marketplace to myriad

participants and practices. Deregulation also fostered uncertainty

regarding consumer rights and provider obligations and the authority of

government agencies. For example, following the breakup of AT&T in

1984, consumer complaints about abusive and unfair practices increased

dramatically.2

1. Slamming

The right of consumers to choose among competing

telecommunications service providers is fundamental to a competitive

marketplace. Certain unfair practices, notably “slamming,” where a

2. Deregulation of the telecommunication market led to a marked increase

in consumer complaints. See In the Matter of AT&T, Notice of

Proposed Rulemaking, 6 F.C.C.R. 1689, ¶ 9 (1991). See also Debra Kay

Thomas, Comment, The Consumer Protection Myth in Long Distance

Telephone Regulation: Remedies for the “Caveat Dialer” Attitude, 27

TEX. TECH. L. REV. 383, 397 (1996) (weighing the benefits of

deregulation for consumers against the potential for increased unfair and

deceptive business practices).