Against Billing Abuse
A Consumer Guide
Often, companies caught making mistakes on their bills blame the
problem on "computer error" -- as if the company wasn't
responsible for the problem. But computer generated errors can
always be traced to people, be they programmers, engineers, or
those who enter the data into the computer. The saying in the
computer industry is: 'garbage in, garbage out.'
they're bad news. Many consumers simply ignore billing problems,
thinking it's not worth the bother making phone calls and writing
letters to try to rectify the difficulty. That's a bad idea. Honest
and reputable companies want to know about billing problems --
they want to keep their customers satisfied. The less virtuous
companies rely on the inconvenience to deter customers from complaining
-- and will continue the abuse as long as they can get away with
Being a smart
and savvy bill-payer is easy. The following pages contain the
tips and information you need to quickly detect and resolve billing
problems. You'll also learn where to go for more help. A few minutes'
reading could save you money the next time you pay a bill.
1. The Major Types Of Billing Problems & How To Detect
six major categories of billing problems; when you sit down to
pay your bills, these are what to watch out for.
Unitemized Bills-- These are one-page bills which contain
nothing more than a few totals -- they're essentially useless
because they make it difficult to determine the accuracy of the
charges. When you get a bill, ask yourself: Is the price of each
product or service ordered listed individually, so that I can
identify it, or have I been given only a total amount due? Examples:
* A California
woman received a one-line bill for $36,000 for a hospital visit.
When she demanded an itemized bill, she discovered two erroneous
charges for $15,000 each.
* An entertainment lawyer billed his client $775 for "meetings...
telecons and correspondence...additional conferences, telephone
conferences, correspondence and memoranda..."
* A woman hospitalized for a hip replacement received a bill for
$21,655; dozens of the charges on the bill were listed simply
as "Miscellaneous -- $999.99" or "Supply Charges."
When she added the "Supply Charges" up, they did not
amount to the subtotal on the bill.
Indecipherable Bills-- Many bills are so complicated
and inscrutable as to simulate a foreign language or a secret
code. Like unitemized bills, they shield themselves from adequate
scrutiny and prevent consumers from comparing products or services
bills contain terms which are undefined or have no intrinsic meaning,
making it impossible to determine whether the charge was calculated
correctly. Ask yourself when reading the bill: do I understand
how they calculated the charge in question? Examples:
telephone bills from GTE bill local call charges by multiplying
the length of the call in minutes by a meaningless numerical unit
that equals the cost of the call.
* One five-page hospital bill contained so many indecipherable
items that it was incomprehensible even to a medical doctor also
trained as a lawyer.
* An AT&T bill for telephone equipment used by a small business
coded all the items in serial numbers rather than product names,
so that it was unidentifiable.
Overcharges-- Many bills contain grossly-inflated charges
for legitimate products and services. Many consumers forget to
look at the amount in question, particularly on bills containing
many charges. When paying a bill, make a mental check to make
sure the charge on the bill is the price you agreed to. And compare
the charge to any receipts you received at the time of purchase.
* A waiter
in a New York restaurant added $10 to the tip on a dinner charged
on an American Express Card by changing a digit on the receipt;
the cardholder caught the mistake by comparing it to the original.
* A Memphis, Tennessee woman brought her car into a gas station
to have the brakes checked and was given a bill for $612 for repairs
she had not requested.
* A California utility company overcharged one consumer by 100%-300%
twice within six months. On one occasion, the company claimed
it was a "computer error."
Phony Charges-- Some bills contain imaginary or "phantom"
charges for items never ordered by the consumer. And some companies
send out materials which look and read like bills, but are only
solicitations. Don't be fooled by letters asking you to pay for
items you haven't ordered yet, or suggesting that your "account
will lapse" if you don't pay right away. Always ask yourself:
did I ask for AND RECEIVE the item charged for?
classic mail-order scams involve billing for products or service
not ordered. Beware!
* A Roanoke,
Virginia couple answered an ad for a $100 round-trip airplane
flight to Hawaii -- and ended up being billed an additional $325
for ten pen and pencil sets on their VISA card.
* A Columbus, Ohio woman received outpatient surgery but was charged
for a semi-private room for two days; she was also billed for
an oral thermometer, use of a prep room and anesthetic services
she never received. Since her husband happened to be a doctor
at the same hospital, the administrator of the hospital agreed
to review the bill. She received a refund of $581.60 -- about
25% of the total bill.
* A California woman treated at a hospitaL emergency room for
a dog bite was charged $56 for an electro-cardiogram (EKG) she
* A vacationing consumer rented a car from General Rent A Car
in Orlando, Florida and paid for it by credit card. The agency
added an extra day's rental to the charges; when the consumer
complained to the credit card company and the rental agency, he
was told, "this happens often." While the credit card
company reversed the second charge, it still charged him interest
on the amount.
Interest on Billing Mistakes-- As in the last example,
many billing errors are often only partly rectified, leaving the
consumer to incur the interest costs, late fees or other penalties
for the company's own mistake. Whenever you catch a billing mistake,
always check on subsequent bills to make sure you're not being
charged interest on the erroneous item, or other penalties for
non-payment of a mistaken charge.
* A Minneapolis
bank erroneously debited a customer's checking account $500 two
months in a row. The bank reversed the charges, but failed to
reverse the overdraft and penalty fees which occurred when the
balance fell below the minimum as a result of the mistake.
* Shortly after moving into new office space, a Utah business
received a utility bill for $15,000 in interest charges tabulated
Bill Processing Charges-- The latest wrinkle in the arena
of billing abuse, the 'processing charge' is appearing on computerized
bills with increasing frequency. (Note that these are not the
same as small fees for installment payments, which are a form
of interest on a loan).
charges are nothing more than an effort to bill you for the cost
of billing you -- a cost which used to be calculated into the
price of a product or service. And many bill processing charges
bear little or no relationship to the actual cost of preparing
and mailing the bill.
charges are a way to charge you a higher price than you agreed
to for a product or service you have purchased. Like "postal
and handling charge" abuses, they can substantially increase
If the total
on a bill is slightly higher than it should be, check to see whether
a "billing fee" or "processing charge" has
been added in. Examples:
* A Los Angeles
woman rented a TV while in the hospital; the television leasing
company, a subcontractor of the hospital, charged her a $2 "billing
fee" in addition to the $36 rental.
* A car buyer in Irwin, Pennsylvania negotiated a deal for a new
Oldsmobile; when he looked at the bill, the dealership had added
a $50 paperwork fee.
mistakes is half the battle; the other half is getting them fixed.
The next section will explain how to do it.
How To Get Your Bill Repaired/How To Fix Those Billing Mistakes/How
To Resolve Billing Disputes
billing disputes is a step-by-step process that begins with a
phone call. Most of the time, that's where it will end; sometimes,
however, you'll have to go further. There are plenty of options,
and we'll note each of them and tell you how to proceed. These
are proven techniques we've used to resolve billing mistakes.
1. Read What the Bill Says You Should Do in Case of Error.
found a billing problem -- or even if you simply don't understand
the bill -- you'll need to contact the company. Many bills include
a statement explaining how to do this. Examine the bill to see
whether it contains such a statement.
and federal statutes provide consumers with specific rights when
it comes to billing errors -- this is true particularly in the
credit, banking and utility areas. Such laws usually require companies
to print a statement on each bill telling you how to protect your
the procedures listed, particularly concerning deadlines for filing
a written complaint, if required. At the same time, the following
steps will help you establish your complaint, regardless of what
procedures, if any, you're supposed to follow.
2. Call the Company.
best to contact the company by phone first. Why? Because when
you speak to a company employee, you are in effect investing him
or her with personal responsibility for resolving your problem.
It's a psychological factor that helps ensure you'll get immediate
takes time -- and many companies would rather resolve things quickly
by phone than have employees' time spent in writing correspondence.
Some companies simply refuse to acknowledge letters.
If the company
is located in a distant city, check the bill or "800"
information to see if they operate a toll-free number. If not,
you can always try to call collect. When you call, explain that
you have a billing problem and ask to speak to the person who
can resolve it.
3. Explain your Problem, And How You Want It Fixed
talking to the right person, give the date of the bill and explain
the problem in detail. Make sure the person you're talking with
has a copy in front of him --so they can see the problem and make
the correction right away.
If your bill
is unitemized or indecipherable, ask for an explanation of the
charges. If you have any doubts, or if the list is long or complicated,
demand a fully-itemized and explained bill.
If your bill
contains overcharges or phony charges -- including undisclosed
bogus charges for "bill processing" -- demand that they
be eliminated from the bill -- make sure they also remove any
interest charges or penalty fees at the same time. Ascertain from
the person the correct amount you owe, and agree you'll pay that
you write down the names of each person you speak with, and what
4. If You Have a Problem, Ask for a Supervisor
poor performance or rude behavior from the person you are speaking
with, no matter who he or she is. All too frequently, either because
of poor training or bad judgement, corporate employees forget
that without you, the consumer, they're out of business.
If you have
trouble with the person you speak to -- if they appear uninterested
in your problem, or refuse to help, or don't know how to help
-- ask politely to speak with their supervisor. Use their name
when you do so.
just making the request to speak with a superior will get you
the attention you deserve from the person you are speaking to.
Most employees do not want to appear incompetent to their bosses,
and will work harder to help you in order to avoid bothering their
but very firm when you speak to superiors. Make sure you explain
why you asked to speak with them, and indicate your displeasure
at the poor performance of the person you spoke with before. Let
them know you intend to do everything necessary to resolve the
problem -- and expect the same from them.
that supervisors have superiors too. If you have to, work your
way right to the top. Many corporate executives are insulated
from those in their company who deal directly with the public
-- and they would want to know if employees are doing a poor job
of it. Sometimes, corporate leaders have Administrative Assistants
or Executive Secretaries who can handle a crisis situation that
arrives at the top. They can be very helpful, and will usually
do everything they can to avoid having to badger the chief executive.
5. Write a Note and Pay the Bill
rectified the problem, pay the bill.
Even if you're
sure you've taken care of the mistake, it's always advisable to
note in writing -- either on the bill or in a separate letter
-- the mistake, and who you talked to at the company.
sure the problem has been taken care of, a few lines scribbled
on the bill will suffice. For example, write, "per conversation
with John Doe, 11/4/85, I am enclosing $23 instead of $25, because
of mistaken billing."
But if the
mistake is complicated, sizeable, or if you think the person you
spoke with might not adjust the bill correctly, then write a letter
to the person directly. Refresh their memories about the phone
conversation, state the agreement reached, and enclose the bill
and check. Letters are a particularly good way of following up,
since they can serve as proof of your efforts should problems
or state law requires you put a complaint in writing, do so --
even if it's just to acknowledge a phone conversation resolving
6. If the Company Won't Fix Your Problem
problems can be resolved by dealing directly with the company
in a forthright, persistent and determined matter. Virtually all
companies will correct their mistakes if you insist on it.
companies -- either dishonest firms, or those which are simply
insensitive to consumers -- will refuse to help you out. You have
You can give
up and pay. You lose, and so do other consumers who will be abused
by the company.
You can refuse
to pay. If the company believes it's correct, it may take you
to court. Companies which abuse consumers will rarely go to court,
however, for obvious reasons. Be aware, however, that even if
the company declines to come after you, it might still be able
to impair your credit rating, which can have negative effects.
State and federal laws govern reports to credit bureaus and prohibit
false reports to credit rating bureaus.
You can sue.
If you've already paid a mistaken amount, or if you want to avoid
affecting your credit rating no matter what, you can sue the company.
Most states maintain small claims courts which allow citizens
to sue without lawyers and without any technical knowledge of
law -- all you need is your bill and accompanying letters to the
company (the more detailed the records are, the better). Small
claims courts are usually limited to case involving a thousand
dollars or less; if the dispute involves a large amount of money,
you may wish to hire an attorney.
You can seek
other help. In many cases, government agencies can assist you
with a dispute. (In fact, in certain areas, such as utility bills,
state law may require you to appeal first to a government agency,
such as the utility commission, before you go to court). Many
states and large cities have consumer protection departments;
some non-profit public interest organizations will assist consumers;
state bar associations frequently offer legal assistance to those
who cannot otherwise obtain or afford it; and a list of key federal
agencies is included in the Resources section below.
fraud or other criminal activity is involved, contact the local
police, district attorney, state attorney general's office, and
the U.S. Postal Service, if the mails are involved.
you seek government agency assistance: this can be a time-consuming
process, and you may have to be almost as insistent about getting
their help as you were with the company involved.
Resources -- Who To Contact For More Help
If you need
help, you may wish to contact any of the following agencies:
Trade Commission -- Credit card, charge account and other
billing problems covered by the Fair Credit Billing Act; credit
report and debt collection practices. It's always best to contact
a regional office of the FTC. Or you can write to the headquarters
in Washington: 6th & Pennsylvania Avenue, N.W., Washington,
Reserve System -- For general problems concerning banking
matters, contact the Division of Consumer & Community Affairs,
Board of Governors of the Federal Reserve System, Washington,
Postal Service -- For fraudulent or deceitful bills or
scams sent through the U.S. Mail. Contact your local post office
and ask to speak with a Postal Inspector.
Representatives -- Your U.S. Congressman or Senator employs
special staff to assist constituents who are involved in serious
disputes, particularly with federal agencies. They may be able
to help. Contact their local offices first (check the phonebook)
or call their Washington office at (202) 224-3121.
State Utility Regulatory Commissions -- Most
states have separate agencies which handle utility rate cases
and customer billing disputes.
Local Officials -- Like their federal counterparts above,
elected officials can often intervene to settle disputes. Find
their offices in the telephone book.
of Consumer Affairs -- Many states, and even some large
counties and cities, maintain consumer affairs departments staffed
by trained experts who can provide advice and will sometimes assist
you directly with a billing dispute. Check the phone book.
Groups -- Private, non-profit consumer groups or similar
organizations often have lawyers or consumer specialists who can
help you. They are usually listed in the phone book, or call local
newspapers to get their number.
Media -- Don't forget to contact local newspapers or
tv and radio stations; some offer consumer assistance, or they
may be interested enough to do a report on the matter. The media
is a good avenue to warn other consumers to avoid particular problems.
Bar Associations -- Frequently, these lawyers' organizations
will help you find an attorney, or can refer you to other organizations
which will do so. Let them know if you are unable to pay, since
they may have special services in such cases.
Attorney General -- These offices can be very helpful,
particularly if many consumers are involved, or if fraud or other
criminal activity is suspected.
-- If you are the victim of a fraud, theft, or other crime, contact
"Truth in Billing" Reform: A Bill-Payers' Bill Of Rights
With the exception
of federal laws governing financial institutions' disclosure and
billing practices, consumers have relatively little statutory
protection against billing abuse. A few states have enacted so-called
"plain english" rules requiring that contracts be written
in non-legalese; some state utility agencies also mandate readable
bill formats. Generally, however, consumers with billing problems
they can't resolve either have to go to court, which can be expensive
and time-consuming, or give up and pay.
of lawmakers to this issue is long overdue. Consumers are entitled
to the protection of a Bill-Payers' Bill of Rights, which FTCR
is presently drafting for model legislation.
is an outline of the "Truth in Billing" proposal. We
welcome your comments and suggestions.
1. All bills
must be fully itemized.
2. Terms of bills should be standardized to enable consumers to
compare product and service prices from bill to bill and between
companies. All units of measurement should be defined on the bill.
3. All calculations should be explained on the bill.
4. A consumer's right to protest billing problems or errors under
applicable laws should be noted on the bill, along with the name
and telephone number of a person or office within the company
to whom billing inquiries can be directed.
5. Companies should be required to respond to billing inquiries
within a specified period of time.
6. To deter companies from abusive billing practices, firms which
fail to rectify verified billing errors within a short period
of time should be subject to triple damages, with an appropriate
minimum fine and liability for attorney's fees.
7. Criminal penalties should be assessed against companies which
repeatedly and systematically provide erroneous bills or violate
any of the foregoing provisions.
8. A Consumer Protection Board should be established. All companies
which regularly bill for their products or services should be
required to periodically enclose notices inviting consumers to
join a consumer-controlled organization operated to represent
consumers and small businesses in billing and related disputes.
Information About Submissions to FTCR:
should not be construed to contain legal advice. Because of our
extremely limited resources, we are unable to respond to most
requests for advice or help with billing problems. While we will
treat any information provided as privileged and confidential
if you ask us to do so, you should understand that when you provide
information to FTCR, we do not become your attorneys. With your
permission, we may use your information to investigate the matter
you bring to our attention. However, our litigation department
brings a very limited number of legal actions each year and thus
if you believe you require legal assistance you should contact
a lawyer immediately. If we are interested in representing you,
we will contact you at the address and telephone you provide.