give evidence to the inquiry? >> the point of the inquiry, it must choose who it wants to speak to and call them under oath and make sure they answer questions accurately. clearly it's going to want to talk to editors, proprietors, and those who are responsible across the media. that's going to be the work that it does. ghtmr. sakerwou .. honorable friend agree with me we'll never be able to stop criminals intent on phone tapping. whatever we do, whatever steps we take, we've got to try to minimize the possibility? >> i mean that's right. you are never going to stop all law breaking through a regulatory system, just as you never stop all law breaking through a policing system. with the media, you have to have free and independent that does not feel the heavy hand of statutory. you need a change of law, but you also need a change of conscience. >> does the prime minister agree with me the general public will

find it amazing that anyone suggestions self-regulation, isn't it the number one priority that we have regulation that's independent? >> i like the word independent rather than self. i think self sounds like newspapers regulating themselves rather than someone independent, not reliant on the government. that would be worrying. someone more independent who can take a strong view. >> mr. speaker, will the inquiry be able to take evidence from mr. lance who used to work and said in 2006 when he worked there, he sometimes felt like rupert murdoch was the 24th member of the cabinet? >> i'm sure that lance will be available. i have to say the book he wrote about the last government is one the most depressing things i've ever read. >> if the will of the evening is carried and news international were to withdraw the bid for bskyb what steps would they take

to persuade murdoch to do the decent thing? >> as i've tried to explain, i think the government has a responsibility to act within the law. we have to deal with each merger, acquisition, and process. that's what my friend has to do. tonight they are going to express an opinion. that opinion will be heated. >> roughly, the prime minister sated -- stated and will tell the house whether they have been in contact to express the opinion about views international and whether they are trying to investigate the company for possible breaches? >> i haven't had any contact with any u.s. politicians about this issue. and, you know, i haven't had that contact. >> there are thousands of families thrown back to a involved one death.

would the prime minister ensure to have conversations to start talking to editors of national newspapers about not rejudge stating stories, and provile them with help and guidance and information about notices so that their trauma can be reduced and not added to their grief? >> i think she makes a great point. it's not just something for the bbc, about trauma and being sensitive about the issue. >> does the prime minister agree that one the key weaknesses of the commission is that the public interest defense contained in the code has frankly been used and abused over the years? this is why it is so important that we have independent regulation and those who continue to cling to the idea of self-regulation will rot?

>> i think my honorable friend who did an excellent job as my press secretary for many years before taking the sensible view that he belonged on these benches. there is a problem. the inquiry have to look at. which is you do want the press to take action in the national interest and to have that. but you've got to have a system where they are not breaking the law. it's an issue that has to be resolved. >> mistaken -- >> will the prime minister explain further the practical difference between self-regulation and independent regulation? >> i don't want to get into theological debate about this. i think the problem with the word self-regulation is implies the press has been effectively regulating themselves. what we are looking for, although this is for the judge and panel, is something more independent. not statutory with a heavy hand of the state, but independent and able to make sure that proper standards are followed. i gave some examples of how this

works elsewhere. i think it can be done. >> i welcome the statement by the prime minister and the leadership that he has shown on this matter. with regard to the inquiries, can i ask him to clarify this? we have seen in recent months and recent years certain inquiries have held evidence behind closed doors. to ensure that all of the evidence has been caught is in public, so the public can see what's been done and what's been done to connect -- correct it? >> this is independent inquiry, led by judge taken under oath and in public. that's the point. if it was decided inquiring the deep national security issues, it might have to a different session. but it's a public inquiry. >> the prime minister says that he wants the cross party approach. when will he need with the leaders of the parties in the house? in 2006, the information commissioner reported that up to

3,000 breaches of privacy? >> that was one the wake up calls when they didn't wake up. in terms of taking the view, i can discuss that with my friend and see what the best way forward is. >> mr. david morris. >> can i ask the prime minister and the group feeling of this house that we could actually put the full vetting authorities of the government to the asis stance to the leader of the opposition so he can find out more about his director of communications? >> we all have to answer questions about the people that we employ and the activities they might have under taken. i'm sure the leader of the opposition will be doing just that. >> sheila gillmore. >> thank you. when they were urging the

culture secretary to refer this to the commission, we were given to understand that the reference as it were referred would be very limited. on monday, the culture secretary indicated to this house that clearly terms of reference would be available. are the terms of reference that would be made apparently been sent already this week going to be made available to the house? >> well, i answered this question perhaps in the debate later. the point is the commission has been asked to look at plurality grants and the issue. we have to do them under the law. we can't invest new grounds, we can only use the legal instruments and test that is are there. >> mr. charles. >> mr. speaker, may i welcome the prime minister that sunlight is the best disinfectant. if we are going to sort it outcross party, sure it's not good enough just for government and special advisors, ministers

and their special advisors as well in >> i think that's right. the point about the politicians and press and where it has gone wrong, because we have been courting support rather than confronting problems. i admit that as leader of the opposition, you want to get the newspapers to support you and trying to explain what you are doing for the country. that's not going to stop. we are not going to live in a monastery and never talk to journalists again. as wonder as it seems at the moment, we have to have a healthy relationship where we can have the meetings and discussions. at the same time, we confront what we have. that is what the commission is going to do. >> mr. speaker, i'm not a legal expert, i'm concerned about the suggestion there's a nondisclosure agreement between news international and glen at the mcclure. the man at the center of the hacking. the nondisclosure agreements

must have taken place between news international and him around 2005 and 2006 at the time that andy coulson was at news of the world. i have a deep concern about who negotiated this and will the prime minister look into this personally and will it be part of the inquiry? >> it needs to be part. the point is the police inquiry. never mind the inquiry that is about to start. there's a police inquiry now into what went wrong of the news of the world. how much hacking, who was hacked? who knew? all of those questioned answered by the police. full on police inquiry, not the rather thin inquiry that happened before. >> in terms of transparency and in terms of meetings between politicians and media, can i ask my friends to go further than the leader of the opposition suggested not just back to the last election, but to the government and see what people on both sides of the house have been up to? >> i think we're going to look at the issue of transparency and how best to put it into the code

and consider what is right and fair. i think the inquiry will be able to look at contacts over a period to try and see what went wrong in the relationship. >> mr. jim? >> thank you. will the meetings of the inquiry be open to the general public? in other words, will the general public know as well? >> this is a public inquiry, held in public. >> does the prime minister believe once a healthier relationship is established between politicians and the media, it will be easier for the government to adopt in relation to drunk community or immigration? >> that's a lovely idea. i hope -- no, i think that -- as i say, this is not going to mean no contact between politicians and the media. there are difficult issues. you mentioned a couple of them where we do need to try to explain and take people with us when we are taking difficult decisions. we cannot do that ourselves.

we need a lively and questioning media to help us do that. perhaps this healthy relationship will make what he wants more possible. >> we listened very carefully to the prime ministers answers. i would like to ask the prime minister would he accept there's a difference between explaining government policy or indeed the opposition's position to the media and courting their support? and that it is that culture of courting the support of the media that needs to be tackled by not by the inquiry, but by the members of the house? >> i agree, there's nothing wrong with meeting with editors and trying to explain why your vision is the right one for the country. people expect you to do that. where it can go wrong is where politicians start doing things, perhaps influenced by the media companies that they wouldn't do. i remember standing from opposing the 42 day detension. which i don't think most of the people on the front bench

believed it. i think they were doing it because of the pressure from the press. profoundly wrong. that's what we have to stop in the future. >> can i welcome the prime minister statement? does he agree with me that the press that's constituted is clearly not fit and that it would have been most helpful if the reform has been initiatived in 2007 if the phone hacking at that time failed? >> there are many people on the press complaints commission who have tried to make it work. i would argue it has made improvements in recent years from when it was originally established. when you look at what's happened and when you look at the trail of reports and problems in the rest of it, the pcp didn't do enough. therefore, reform is needed. that is one the starting points for the inquiry. >> does the prime minister address the inaction over the grave issues over a number of years? and if they ask now to succeed and maintain public support, they need to be above party politics and political opportunities should be shunned

and ignored? >> i think he's right. because we do need to have an all party approach as far as possible. sometimes all party approaches can be become a conspiracy. we have to make sure that's not the case. i think the basis inquiry about the need to change the regulatory system, i think if we can push forward in that way there wouldn't be too much as it were regulatory arbitrage. which is a danger in this position. i propose to keep in close touch about the leader of the labour party. >> mr. speaker, i wonder if my friend agreed with the senior commentator in the twittersphere who says that people in glass houses should not throw stones? >> i long again learned my lesson about saying anything about the twittersphere for danger of getting the wrong thing in the wrong place. >> media regulation goes beyond

simple law breaking. how can we be sure it can act in a timely passion on no wrongdoing without waiting for numerous criminal investigations and the prosecution to follow them and have concluded? >> the honorable gentleman makes a good point. the truth is the element of inquiry, which is, for instance, investigations into allegations of police corrupt or investigating into the hacking at the news of the world. that part of the inquiry, that has to wait for the police investigations to be carried out for prosecutions to be carried out, and indeed as i understand it for any appeals to be launched. that's one the reasons for having o

did you ever wonder if you were to read one book a day in this day in this library how long it would take you? well come you'll find lots of answers about this unique library and c-span's original documentary, the library of congress, airing this monday night. will tour the iconic jefferson building, including the great hall in the reading room. push a treasure, sounded my books and special collection, including the original thomas jefferson library and presidential papers from george washington to calvin coolidge, and how the libraries using technology technology to discover hidden secrets in the collection and preserve its holdings for future generations. china says the library of congress this monday night at eight eastern pacific on c-span. and read every book in the slavery, one per day, would take over 60,000 years. >> in a few moments,

unauthorized charges on phone bills come a process known as cramming.

>> americans could eat pena to

$2 billion a year in unauthorized charges on phone bills, according to a study by the senate commerce to many. the report is on what is referred to as cramming and looks at phone companies that allow third parties to have churches, many an an authorized to them in them in phone bills. senator jay rockefeller says he's going to introduce legislation to ban or party fees and the fcc estimates that as many as 20 million american households have unauthorized feeds on their month play phone bills every year and said it too is considering new rules to protect consumers. this is about an hour and a half. >> today's hearing is about a scam that is caused telephone customers billions of dollars. all of you at the witness table are aware of this in various ways. and it is called unauthorized charges. the telephone company could have bought the if you if you want to buy dish tv. that's not the race charge.

but a great percentage three charges, but phone companies to let them appear on the bill. what happens is they appear at the bill and the person who doesn't necessarily carefully weeded out, which is often four or five pages long sees this thing and doesn't know what it is. but they didn't ask for it, didn't want it, not upgrades to be fair. legally it should not be fair, but it is there. and it is called cramming. and it refers to what we call mysterious charges that appear in american phone bills for services that people don't want and don't use and did not score and shouldn't have to pay for it. the company is responsible for these cramming charges don't sell legitimate projects. that is the unauthorized one. they don't really sell anything. most of them don't seem to do that. the sole purpose is to place up

his charges on your telephone bill and they are very, very good at that. they are very good at that and hope you will pay your bill every month without looking at it too closely, which unfortunately a lot of people do. in the late 1900s come in the congress and media devoted attention to the study of cramming. i remember it well. committees held hearings on cramming an anti-cramming was introduced in the house and the senate the time consumer advocates and federal authorities in the telecommunications industry on the create something needed to be done. the question was, what needed to be done? the industry told a client congress, i guess, that they would fix the problem themselves and that made sense. but they didn't want to have any -- they did live in a voluntary guidelines for any sort of mandate. as they said, his industry is a

powerful self-interest to correct this problem that were working overtime, which is kind of a strong statement. in the congress and the press, i guess everybody went along with it. nobody paid much attention to it. the congress took their word for it, moved onto other important issues because we believe the cramming problem is being addressed, which of course was not. what we know now is the cramming problem with not so, far from it. the minute congress decided to trust the industry, the kramers saw the relaxation in the tray back in. american families and businesses have been paying prices ever since then feared so when this committee, we held a year-long investigation on this. hundreds of thousands of pages, hundreds of witnesses, consumers, businesses, all kinds of crooks. we have a very good idea just

how the price has been. here's what we've learned. more than a decade after telephone companies implemented voluntary guidelines, hundreds of cramming chem names -- we don't even know how many, we don't even know how many continue to place tens of millions of bogus charges on families and businesses on their land mines. that's an important distinction. not on cell phones, but landmines. they do that every year. the individual charges are usually small amounts between 10 to $30, when you add that up and it becomes an enormous amount from the billions and of dollars. now, there's also a cost of cramming is hard to put a figure on, the agni people ought to go to figure out i didn't order this if they do look at their bill, how to get rid of that? they call their cramming company and nobody answers the phone or maybe somebody does and refers

them to the telephone company and they just get lost and give up and get mad and feel even less family about their congress. so it's a problem. one of the questions we've asked is what have the telephone companies been doing for the past decade to protect their customers from these abusive tactics? i was at a major telephone ceo last night we started talk about that. there was in a great deal said. anyway, the short answer is not enough. well, i'll telephone companies have anti-cramming policies. they haven't made a serious effort to keep the kramers off of their landline phone bills. even when the phone companies kicked a company out the bills, the kramers come right back in. a week to week or so and slid right back in. many integrations crack down on

crammers insight make money from cramming. it may make a lot of money? no, but in america money is money. and if you could make money, why not. according to the financial information committee staff has reviewed, telephone companies for a dollar or two every single time they place an unauthorized third party charging the customer's bill. so do the math. that's well over a billion dollars in profit. today my staff released a report detailing how cramming works and how much money it is costing and not just american families and businesses, our businesses in particular -- people in particular.

i ask unanimous consent to enter this report in today's record. hearing no objection? >> no objection, mr. chairman. >> thank you. although congress and telephone companies haven't been doing enough to protect consumers from cramming, i'm glad to say that some state and federal law enforcement agencies have made on the job. we are going to hear from the attorney general of illinois, lisa madigan who says right there and will tell us our office is filed within 30 last used against crammers and we'll hear about a lot in vermont recently to protect his and against cramming. a lot of other law enforcement authorities including the federal communications filed lawsuits and shut down crammers. but what they need to know is crammers can come right back. they are ubiquitous.

they are everywhere, like all the little satellite alien space beings. they just drift around waiting to collect a monthly phone bill. but as we hear today and i'm sorry in so long, when they shut down one crammer, new appeared to take their place. it's obvious that voluntary guidelines will not voluntary guidelines will not. it's also clear that case by case law enforcement. it's also clear that case by case law enforcement approach will not work. there are just too many out there ripping off to many consumers. it's time for us to do something more about it. i'll say one word being. there are about 300 million charges, mostly unauthorized entered onto telephone bills each year. 300 million. and that is about -- worth about

$2 billion. you know, that's not a lot of money except if you have to pay it. people living on the edge, 1995, that's a lot of money. and again, all 2 billion were not cramming charges, the most of them are. we estimate there've been about $10 million on consumer telephone bills. we estimate at&t and qwest and verizon have more than $650 million. those companies from this themselves. that's pretty big money. and so anyway, we've got a real problem here and we want to do the right thing and we want to protect people and that's the end of me, so i call upon senator i ought. >> thank you, mr. chairman. i want to thank you for holding this important hearing. i know you and your staff with a great deal of time and effort

into preparing report the committee released today. i also want to thank those that the federal and state levels was pursued against those perpetrating fraud on consumer satisfaction which recognized the somatic and income attorney general of illinois, with whom i worked with when i was the attorney general of new hampshire and she has been very given this scam an eye out welcome her this morning. from that decade, new hampshire has been responding to the practice commonly known as cramming. when it served as the state's top one person officer ever saw a consumer protection bureau as general madigan does come which included consumer protections were spoken brochures to provide individuals with information about how to protect against cramming, additionally in new hampshire is also authorized billing survey varies to ban them entirely from access to the

telephone company billing apparatus to prevent further harm to consumers. as we continue to examine this issue and discuss how to best address it, we must not lose sight of the fact that cramming a fixed regular hard-working americans who are being scammed out of their hard-earned dollars. as a former prosecutor comest my intent to bring together bad actors, but simultaneously recognized there are legitimate businesses providing services to consumers. it is my hope will spend time this morning talking about the prosecution of creamers come out of go after those defrauding consumer, without strict deterrents or fear of richard gershon for the public good we are certainly not full addressing this issue. in addition to witnesses from illinois and law enforcement to a year from today, i appreciate mr. byrd being here as well. ..

and the urgent need to find workable solutions that protect the public, i very much appreciate the work that went into this year-long investigation. i am disappointed that the findings were only released right before the hearing because i would have liked to have heard from our witnesses more of an analysis of what their view also is of the report. so going forward i hope all of you will feel free to augment the record with your purpose -- perspectives on the year-long investigation was conducted by

this committee. i appreciate each of the witnesses for sharing their expertise and for helping the committee better understand this issue and as a follow-up to this hearing i also believe it is necessary that we do hear directly from local exchange carriers, aggregators as well as the department of justice who have been prosecuting and imposing fines on those who conducts cramming so that we can hear their perspective on this report and also provide additional information as we address this very important issue on behalf of consumers. i look forward to the hearing today and i want to thank each of you for being here. i yield back the balance of my time. thank you. >> thank you very much, senator. shall we be kind? because we have amy klobuchar here and she has another hearing she has got to go to. and amy might like to say something but then that leaves

mark begich so we have to figure out. >> i will allow senator klobuchar to have as much opportunity or she desires. >> what a gentleman. >> thank you mr. chairman and i would concur with what senator ayotte talked about. in fact our state has been taking this on an attorney general madigan knows not just the federal level but the state level with attorney general swanson and last january she and i join together and talked about the consumer fraud lawsuit against a company that fraudulently charged thousands of minnesotans for services that they neither authorized or used. the company which is called t. -- cheap to dial-up charged consumers in minnesota for long-distance service fees and you know how many people actually use that service mr. chairman? nine people. nine people of the 2567 that

were charged. it is just one example of an process that has cost consumers and businesses millions if not aliens of dollars. i will never forget the consumers that were standing there with us and they were -- i think one was -- they were a lutheran minister and his wife and of course she had checked the bill every tiny detail and was able to discover that charge which is not something i would do. and so it is very hard for consumers to notice these charges because so often they can be $10, $15, $20, $5, amounts that they would not armor lien notice on a larger bill. that is why when you added up it becomes a big chunk of change. i am one that believes that it shouldn't be up to the consumer to play detective going over their phone bills with a magnifying glass every month. i believe that phone companies and aired party aggregators need to crack down on crooks who are

stealing from our citizens and our businesses. we need clear rules of the road that prevent this behavior. there has been good thing about our deregulated market that is lead to innovation but there are also issues we are seeing like this one where crammers have been exploiting this open market. so i applaud the commission for the rulemaking. i look forward to helping in any way i can. i look forward to hearing the testimony. i am chairing a hearing in judiciary on the violence against women act which i know the chairman cares about very much so i may not be here for all the questions but if i'm not i will submit my questions for the record. thank you. >> thank you very much senator klobuchar. my vice chairman, senator ayotte, is not going to make an extra introduction. >> thank you mr. chairman. it is my privilege to introduce

the attorney general from illinois, lisa madigan will provide testimony today who has been very very active going after crammers in her own state and again i have had the privilege of serving with her as attorney general, so i know how to diligent she is in protecting consumers. thank you attorney general madigan. >> thank you senator ayotte, mr. chairman and distinguished members of the committee. i appreciate this opportunity to testify. today want to stress three points the drama and half years in experience investigating and bringing enforcement actions against phone bill crammers as the attorney general of the state of illinois. number one, most consumers are completely unaware that their phone number can be charged almost like a credit card. many consumers will never discover that there are unauthorized charges buried in their phone bills. number two, my office is yet to see a legitimate third-party charge placed on the consumer's phone bill.

three, phone bill cramming is such a persistent and pervasive problem i believe the only effective solution is to enact legislation banning third-party charges on phone bills. to give you an overview, illinois individual businesses, churches and government agencies have been filing complaints with the attorney general's office about phone cramming since 1996. in response illinois as well as other states and the ftc have taken a series of law enforcement actions and when we do that initially, did temporarily quell the problem. however we are seeing a strong resurgence in the number of cramming complaints. initially the scams that we saw were perpetrated primarily through telemarketers, especially in the years prior to the establishment of the national do not call registry. recently however crammers like many other illegitimate scams have moved to the internet. some internet victims tell us that they have done nothing more than submit their name, their address and importantly their

phone number in response to on line offers for either a prize drawing, coupons or free recipes. eventually of course they learned that they had an crams. again they did not know that they were buying anything at the time and they did not know by giving their phone number they were authorizing a charge on their phone bill. so they are understandably puzzled and quite frankly angered when sometime later they notice their phone bill contains a charge for a product or a service that they didn't seek out, they didn't authorize paying for and very importantly they never used. that is when some of the victims turn to my office for help. however ftc data indicates that as few as one in 20 consumers that are built for third-party charges on their phone bills are even aware of the billing. my own investigations have revealed a similarly low level of consumer awareness. in fact through our investigations we have learned that many victims have never visited the web site of the vendor whose product or service they are being charged for and worse, some of the victims don't

even have access to the internet. additionally victims consistently tell us they have never used the product or service for which they were built. again that is most surprising consumers and everything to every penny they purchased anything in the first place. for example, one case that my office handled, we managed to obtain the data on the more than 3500 illinois consumers we had been built for internet service and extended cell phone warranties. most of the consumers we talked to did not know that they were being billed and none of the 3500 consumers had made a warranty claim or use the internet service. our investigations consistently revealed that most phone crammers rely on deception, however others engage in outright fraud. scams involving deception and a basic marketing strategy has remained the same throughout the years. weather over the phone on the internet the consumer is never clearly told they are making a purchasing decision or they will be billed for the purchase on their phone bill or giving their

phone number will authorize a charge on their land line phone bill. in contrast to the scams involving deception in which the victim participates in the transaction albeit unwittingly, scams involving outright fraud don't require them to take action whatsoever. this type of cramming is referred to as -- for the consumer acceptance of the vendors offer is completely falsified. in a number the telemarketing cases we have investigated we have obtained the recorded phone conversations of consumers reportedly agreeing to an offer. the only problem is the voices on those recordings are not the voices of the consumers who were built. while i'm on the subject of billing i should note that and another for cases the county coroner's office a steak and sheikh restaurant in my and my personal favorite the public libraries dial a story phone line, were among the 9800 illinois businesses built for credit repair services that even assuming credit repair services were legitimate can only be used

by an individual. obviously not by a business. i would argue to this committee that when an automated children's dial a story phone line supposedly signed up for credit repair services, it is time to stop third-party billing. the bottom line is that from the beginning third-party charges on phone bills is an open invitation to fraud and deceit. it has been a scam where vendors, billing aggregators and carriers make significant money by consumers never noticing the charges on their phone bills. i strongly support decisive legislative action on the state and federal level to ban the practice altogether. again i thank you for the opportunity to testify today and i'm happy to answer any questions you may have. >> thank you very much general madigan. and now we turn to general burg. >> it is actually assistant attorney general burg but i

appreciate the promotion. >> i very much appreciate the opportunity to testify to the committee today over the past year and a half. our office has been issuing subpoenas to third-party billing aggregators, to vendors. we have been serving consumers and interviewing consumers and that we have reached a number of conclusions about the problem of cramming which i would like to share with you today and then i would like to talk about a potential solution to the problem that has been embraced in vermont. first of all, the incidence of cramming in vermont is extremely high, close to 90% of the people who responded to the survey had absolutely no recollection of ever having given consent to be billed on their local phone bill. secondly, the level of consumer

awareness about the possibility that one can be billed for third-party charges on a local phone bill is extremely low. thirdly, we have found any instances of deception being used in marketing third-party charges that then get passed on to a local phone bill. and fourthly, and this is really the major point that i wanted to make and it has to do with consumer expectations. ordinary people do not expect that third-party charges by companies that are unrelated to their local phone company can be placed on their local phone bill. they are simply not aware of that. anymore than people would expect or any of us would expect to have their party charges placed on our monthly mortgage account statements or our electric bill. and without that awareness, people are not going to play the detective that we heard about. they are not going to scrutinize

their phone bill to figure out if there's something on there that they should be complaining about. now, vermont has given the potential solution of disclosure a fair shake for the past decade. there has been a statutory requirement in vermont that third-party vendors send a notice through the mail to people who are going to be billed on their local phone bills by that vendor and the fact is that system has not worked and the level of awareness of the possibility of those charges has not increased in the state. so what have we done by way of potential solutions? in january, the attorney general's office proposed to the vermont legislature that adobe introduced that would actually prohibit third-party charges on local phone bills. with some limited exceptions for things like direct dial or

dial-around services initiated by the consumer from the consumer's phone or operator assisted or collect calls for companies directly regulated by our public utilities board. the proposal was otherwise to ban such charges and a bill was introduced to do that. it was approved by voice vote in both houses of our legislature. it was signed into law the end of may and became effective immediately. under that law, a claim by a vendor that the consumer somehow consented to the charge is not a basis for allowing the charge. this is an actual prohibition. other forms of payment are allowed so vendors and want to charge people using their credit card or debit card, electronic funds transfer, a check, the kinds of payment mechanisms that people understand and expect, that is all permissible but you can't do it on a phone bill. since may there has been no

negative feedback whatsoever about the bill. we think people are pretty happy with it and i would point out that the local phone companies supported us and that initiative in the legislature. we approach them last fall and basically made the pitch to them that these are their customers as well and they came on board. so with that coalition we were able to get that legislation through and i would very modestly suggest that this may be a model for other states and for the nation. thank you. >> thank you very much mr. burg. now we turn to ms. susan eppley from georgia who has had some experience that i think she would like to share with us about cramming. >> chairman rockefeller, ranking member hutchison and members of the committee thank you for having me here today. good morning. my name is susan eppley and i'm from decatur georgia. i'm here today to tell you about my personal experience with cramming. in early 2011 i worked for a

successful franchisee of 32 quick service restaurants as the accounts payable representative. this company even in tough times times offers incentives to managers and crews including but not limited to bonuses paid to managers for hitting their numbers based on profit and loss statements. in october, i was entering the at&t invoices. i got curious about how different the bills were from store to store. upon investigation i noticed there were charges for services that were not from at&t our telephone company. i called at&t and spoke with a customer service representative who recognize the problem and she explained that at&t was billing on behalf of a third-party company. when i asked further she said that it was the customers responsibility to block phone bills from such charges. she told me she takes a lot of calls like line. i contacted the third-party company as a phone number provided in spoke to their customer service representative who said that we requested the

service. ivan contacted the area manager for the store and he said, you didn't request the service. i went back and forth until i insisted the charges were never requested and only area managers have authorization to make those requests. upon my insistence the representative offered to take three months of the charges often credit the at&t bill for the next month, but i insisted that all $1900 be credited back. the representative then said he couldn't do that and that he had a recording of their core requests for service. i asked to hear. i was in transfer to a supervisor and then credited all of the charges and i never heard the recording. for the next two months it came through every single bill for all of our accounts, set up a block on each account to prevent this and to my best estimation i sense -- spent 15 hours dedicated to this issue alone. those hours did not include the

timer accounting department and airy manners spend on it. in the end six ibra 36 accounts were affected and the estimated amount crammed was about $4200. upon my persistent and assistance that amount was credited back. even though it's each time the third-party company told me they had a recording roofing we requested each service they never play that played the recording for me. it certainly is annoying and a hassle to deal with additional of ministry paperwork making additional phonecalls and keeping information organized especially for services not requested. are r-rated busy accounting apart -- department to deal with ministry of issues such as readjusting profit and loss statements etc. that being convenience and cost of administrative paperwork on this issue paled in comparison to what was taken away from the managers of our restaurant. these managers work long hours and it is a demanding environment all with a smile on their faces. they have a tremendous job of

juggling employee relations customer satisfaction serving safe food and controlling costs. as a mentioned earlier in my statement, rape managers are rewarded with bonuses and some of our managers no matter how hard they work and no matter how much they earned it did not receive their bonuses because of cramming. is infuriating to me that it is legal for help in these without authorization to charge her businesses and view our statements and in effect take money out of the hands of hard-working men and women. i shudder to think that citizens, especially senior citizens who are in a fax -- fixed budget are falling victim to cramming because they don't have an account payable representative to check her out authorized charges. is my hope that our lawmakers will prevent individuals from being a victim to cramming by making it illegal for at&t and other companies to allow third-party billing. thank you. >> thank you very much. i wish there were more consumers

like you. you are a bulldog. >> thank you, sir. >> i guess that is not complementary but i meant it to be. [laughter] our next witness is dave spofford who is the president as i go and what do you have to tell us? >> chairman rockefeller, other senators and members of the committee thank you for having me today. and the founder and ceo of zygote and expense management company based in manassas virginia. i want to thank you for your commitment to investigating this very important issue of cramming. at as a 20 year background is home communications contracts in billings and i've never seen cramming as bad as it is today. as we processed tens of thousands of carrier invoices every month or customers and are responsible for moving these third-party charges for many of our clients we are particularly

interested in the subject matter. cramming or unauthorized charges by carriers on behalf of third parties has been and remains a major problem to the industry. zygo manages approximately $1 billion per year in total expenses for more than 200 clients. we have built software that helps companies of all sizes manage their medication's expenses and identify areas where they can cut costs. we are member of the telecommunications expense and is meant industry for which i have served as president. our clients span from $50,000 to $10 million per month on a variety of telecommunication services. we monitor their invoices every month which allows us to identify trends recurring problems and the results of our joint efforts to get control of telecom expenses. because of this we have a unique view into tell commissions billington services. after reviewing historical data we found the following information that i hope will help the committee to investigate this problem.

we found 40,000 unique instances of cramming during the timeframe. the recurring amount for an average cram is approximately $18 a month. we estimate that over 80% of all businesses experienced cram charges. 71% of our customers have experienced cram charges in the last three years. since the average charge is small and the time investment required to eliminate the charge is high, many customers simply pay the charge. xipo has identified major third-party billing consolidators who are responsible for the majority of these charges. in addition we have identified approximately 600 third-party biller names that are used to build nearly 3000 different line item charges. the large quantity of ill or names that are used by much smaller numbers of actual billers may be a strategy to avoid automated detection by systems like ours.

these charges often have descriptions such as voicemail, e-mail, directory services, web hosting and other names that appear to be normal services to the customer. as it turns out more than 99% of these charges are an authorized by the customer and are for services they are not receiving. decentralize multilocation companies seem to have more exposure than other businesses so large retail chains for example are particularly hard hit. the more imports as a business receives the heart of cramming it is to detect since it may be simply remote location may have ordered one of the these services they are being built. so they provided committee staff of details and the names of the third-party billers commonly used for these charges. communications industry both fixed and mobile is already complex and growing quickly. stopped the practice of cramming would be a welcome commercially to all communications customers. chairman rockefeller at thank you for your time. xigo is committed to serving

efforts and we look or were too working with you and putting a stop to this problem. >> thank you mr. subi very much in our final witness will be mr. walter mccormick who is the president of the telecom association here in washington. >> thank you mr. chairman. chairman rockefeller and members of the committee thank you for giving me the opportunity to testify on behalf of the telecom association and i might add it is a personal pleasure for me to be back before this committee that i had the honor of serving for many years as general counsel to the majority and chief counsel to the minority. mr. chairman of our industry accepted your invitation to appear here today for three reasons. first, to acknowledge the existence of a continuing problem, one that impacts consumers, one that is continued for many years despite the remedial measures undertaken by our industry and by the federal

communications commission. second we appear here today to honor and cooperate in your efforts to draw attention to cramming and eliminate it. and third we appear to pledge our industry's good faith commitment to work with you, to work with the committee and with the appropriate federal regulatory agencies to work for further reforms. mr. chairman our positions simply put is that consumers should not be charged for services they did not purchase. for our industry third-party billing had its genesis in a well-intentioned proconsumer initiative by the federal government. in the wake of the at&t divestiture the fcc required telephone companies that have been part of the bell system to bill and collect charges we have with competing long-distance carriers and enhanced services providers. federal regulators believe that the convenience of having all communications related services on a single bill was an

important pro-competition, proconsumer policy. although no longer required, third party billing continues to be valued by many legitimate businesses and by some consumers as a convenience. three interrelated measures form the foundation of the basic consumer protection framework that is in place today. they are the industry's anti-cramming best practices guideline, the truth in billing order and agency enforcement. pursuant to these measures, the steps that phone companies are taking to protect their customers fall into four distinct categories. the first level of protection seeks to prevent bad actors from getting access to the telephone bill in the first place. contractual commitments with billing aggregators require active oversight of all service providers. the second level of protection seeks to make charges on the

customer a customer's bill clear and transparent. example third-party charges are aggregated in a separate section of the bill along with notification that such charges may be -- without risking phone service. the third level of protection is to provide an instant credit to any customer that notifies the company that a charge on their bill is not authorized. the policy of leading companies in the industry is to eliminate the charge, no questions asked. the goal of this first call approach is to provide the consumer with full relief without further hassle including an offer to block further charges from that service provider and to review prior bills to see if similar charges previously went unnoticed and need to be removed as well. finally, many companies offer the customer the option of leasing a block on all third-party charges. the fourth level of protection involves monitoring and audit and suspension of service to problem providers. these measures taken together

can have dramatic results. one of our companies achieved an 89% reduction in cramming complaints in january 2010. nevertheless mr. chairman, as his hearing in your investigation demonstrates, the problem of cramming process. so mr. chairman chairman because our testimony as we began, by balloting the existence of a continuing problem and by committing ourselves to working with you and the committee in addressing it. >> alright i thank you very much for that. i need to point out that our two votes of the morning, think it is two votes, have started so what i would like to do is to -- first, nobody panic. we will be back. what we will do is let amy klobuchar, who has got to go -- got to go.

so do you want to ask a question because we have time for one or two questions and then we can go vote and then on the second vote we vote immediately and come right back. it should be no more than 15 minutes. can you live with that? alright. attorney general madigan, the word was used by mr. mccormack, the were convenience, and i'm very fond of that word because i have been trying -- as a student of oriental languages and even zen buddhism, and tried to figure out what the word convenience means because it is free probably use by telephone companies. you. 30 lawsuits against companies. one of your recent cases last september you filed against the california company called i.d. lifeguards, and this company charged more than 5002 illinois

citizens. 12,004 so-called identity protection service. but when your office contacted these consumers they told me that they didn't know the charges had gotten on their phone bills, didn't know how and that is correct, is it not? >> that is correct mr. chairman. >> you know we have had hundreds of companies like this. and where does the word convenience that telephone companies use the word convenience. they used it when they were talking about, we will fix it ourselves. they use it now. how has this become a convenience? ..

we found when consumers have tried to remove the charges by contacting their carrier they are given the runaround, told they can't do anything about it. they have to contact the vendor. if they had nothing to do with a surface and the charge put there in the first place and then the experience that she went through is very similar to that of, the consumers that we've talked to. so just a little more detail in terms of our case against lifeguard. there was a 56% refund rate, 56%. so in other words of the 5,000

plus consumers in the state of illinois will cram a 56% of them had the wherewithal to find this and have it removed from their bill. that is a clear indication that is outright fraud being engaged in. i think part of the protection service i recall as they were supposed to be receiving a copy of the credit report. no individuals we talked to had ever received a copy of their credit report. so understand there is no convenience. it is a terrible inconvenience. that's just the reality. >> i think you're right. let me call a 15 minute recess and we will be right back. >> thank you. [inaudible conversations]

[inaudible conversations] [inaudible conversations] >> general madigan, let me just finish up my question with you.

i'm fascinated and what mr. mccormick to answer this, too, is why -- all we did was the eighth largest telephone companies. that's our search. imagine if we started going elsewhere how much we would find, state governments, federal government. why do they -- why do they do that? these are huge companies. they make some money from it, yeah, but hopefully they are going to get a lot of bad publicity and embarrassment about it. they made us a promise and broke that promise. i don't know whether the ceo that i had in my office yesterday whether he knew about it or not. i don't think he did. so that's the big corporate structure and always the middle people that eventually everything is money and it's on an account and company is

responsible for what they do. why do they do this? >> mr. chairman, obviously the of responsive this will be >> mr. chairman, obviously the of responsive this will be enlightening. we wouldn't disagree with you from the perspective of what we have seen with consumers. there is an obvious financial opportunity for the carriers because they are receiving a portion of the charges that ultimately end up on inspecting the consumers' phone bills. >> but not that much. >> not that much this has been going on for 15 years and so over that period of time it obviously adds up to some money. in other words, you need to look at the fact that lee and linus service is a declining service, and many people are now relying on the white airless carriers to provide them with their phone service. in so it may be looked at as here's one of our last opportunities to earn some

money. i don't think that's the proper way to look at it from a business perspective, but that's really all that we can come up with in terms of why they allowed this to go on because consumers are absolutely furious. as i stated and i think others have as well on the panel, people are completely unaware of the fact their phone number can be used as a credit card. i was talking to my husband last night, the attorneys general who led medically is not a lawyer, doesn't delve into this, and i explained to him what we were talking about today and he said i had no idea that could be done. so the attorney general doesn't realize that your phone number can be used recently as a credit card? i would argue very few to nobody understands that in this country. >> the senator and i were talking going over to vote and coming back that i don't remember a previous example of when a telephone number becomes the same as a credit card.

it can be used as a credit card. do you know of such instance? >> we don't know of any other instances and clearly consumers to realize that which is why the vast majority of them never even find these unauthorized charges. >> here is one of the typical, at&t, i think it is five pages long and it's got a very small print, and in fact even with my recently corrected glasses i have to look hard to find down here to cram that is u.s. the night. they don't say what they were doing. they have a telephone number. i have no idea what the other numbers will get you, but we've to pay the 1995 every month. and then there's more stuff after page five who goes through this?

you do because you are an american hero and an accountant, but here's some more at the end. who goes through this? >> almost nobody. >> isn't the point that they shouldn't have to go through. they shouldn't be that out, the suspicion i am about to be had a slim going to go through every single line on this telephone bill particularly from a huge companies like that that make hundreds of millions of dollars. how do you answer? you promised that he would take care of the problem on a voluntary basis in such strong language that unfortunately for us to our embarrassment accepted that and now we are in the mess we are in and nothing has changed. why do companies to this? >> mr. triet, i'm aware of the commitment that was made in the late 1990's, and as i began my

testimony today, we agree that this is a continuing problem and that it needs to be addressed and we want to work with you on it and even asked about -- >> that's not the question i asked her, is it? we want to continue to work with you. that's what you said ten years ago in stronger language. what i have said is why do they do it? why does a company as large as at&t and pepsico, there's a whole lot of people on that list that do this and that get this money. why do they do it? i don't understand it. it's bad publicity. its scanning. it's called craming but it's really scanning. it's called artist stuff. it can't be good for telephone companies that have a better reputation which were going to paint right on them.

>> mr. chairman, i can share with you with what my companies have told them ask the same question which is the system began with a federal requirement that it was coupled with state requirements in various states around the country. that is even unclear today whether or not the industry has the devotee in every state to no longer engage in this business and i believe the staff report released this morning indicates there is uncertainty in that area. >> let's say there's some uncertainty. why would the -- i am not willing to stipulate that at this point, but why would the telephone company take the chance? i mean, to most it doesn't seem to be a lot of question. it's illegal. it's wrong. it's scamming. so why would they take that chance? they don't make that much from it.

>> correct. >> so why haven't you cleaned up your act? why haven't they just said stop it from the ceo right on down about 40 mid level people, stop it, stop doing it except for the authorized purchase? >> i don't know the answer to that question other than to reinforce what i mentioned a moment ago about the fact it began as a federal requirement. and again, you know, the industry has taken significant steps even to the report issued today indicates there has been improvement but it remains a very significant very pervasive problem and a real challenge as you indicate once you identify a scammer they quickly come back in another disguise so it's a very significant challenge. >> thank you very much,

mr. chairman. i wanted to follow-up with attorney general madigan. could you help me a little bit in terms of what are the current laws and penalties in place to address cramming, and what is it that has been difficult in addressing this through the prosecution route? i think when someone steals from a convenience store we generally shut down the store, we go after the thief and so when you say to ban all third-party i just want to understand with the difficulties are and why the should be the root versus some other routes. >> sure. we want to ban third-party charges on the phone bills because we have yet to see anything legitimate in terms of the products or services. people are obviously unaware and it shouldn't be the responsibility of the law enforcement to essentially play

whack-a-mole with these organizations. you heard people testify this morning there might be an action that ultimately results in that vendor being kicked off the carriers billing platform, but they reappear with another and engaging the same activities so much so that there is to follow lawsuit twice because we got rid of them once and they appear doing almost exactly the same thing and so it is unreasonable i would argue that it requires states law enforcement, federal level law enforcement to constantly be going after something that is clearly deception and fraud. we in the and you asked the question which laws we use on our act to go after these vendors, and again, when we in the coming after folks, recognize these are the people that have the wherewithal to eventually contact the attorney

general's office and ask the majority of people if they ever become aware of these churches we will call their carrier. few of them make it to us and so it's the end of the day you have to say if we are getting five complaints about one company by the time we start the investigation, they've moved on because we know they are engaged in fraud and if there's a significantly higher refund rate there's a chance they will be thrown off the platform. so they are clever in the sense they are constantly reconstituting changing their name and the type of service they are providing, hiding and under different lines on the phone bills. so, whack-a-mole, you've obviously heard that analogy before but this is a serious situation that is costing individuals and businesses and government agencies significant amounts of money every single year. >> as a follow-up on the federal

you said you've been working with the ftc. >> they have had workshops and have been engaged in this over the years and to pursue them under the federal law. >> i don't know the details of the losses but i know that they have had significant actions. >> because one of the issues we would be interested in looking at is making sure that tools of the law enforcement that they have the tools they need to go after the bad actors. i wanted to follow-up with mr. burg to ascii set from the originally had a notice statute in place that was ineffective and why wasn't the notice -- how did that work when the notice -- why didn't feel in your view verses the ban on the third party? >> senator, i think the notice requirement field because of

extremely low level of understanding in the public about how local phone bills can be used as a way of charging people for an related could this and services. so, you're not going to open the letter that comes from the vendors that looks like junk mail because why would you? you're not going to scrutinize your phone bill because it's your phone bill and you are being charged for your phone service, isn't that correct? but there may be something on there that's unrelated to your phone bill. we have been working for decades to get people to scrutinize their credit card account statements where you can't be charged for lots of unrelated things come and that has even been difficult as this committee knows from the data passed discussions of the last year and the year before, hear the phone bill is so far a field of the normal payment mechanisms for general goods and services people are not looking and so

this is one of the reasons why if you have a huge disparity between the number of complaints filed and the number of victims that you have which is sort of to have the complaint base is a prerequisite to the good law enforcement action we find very few complaints and a huge number of victims again, not surprising in light of still low level of consumer understanding. >> when the notices were said, assuming that these were -- there's many bad actors participate in. i assume under your prayer hall and they would have to send these notices to the consumers, the third party billing, that's one thing i'm not clear on. >> if you're a bad actor -- >> do they even sent the notice this? >> in our experience in many vendors that have the veneer of legitimacy who will respond to the subpoenas that we send out

say yes without consent from everybody that we charged, but in fact there's no way of determining that if it is an online sign up for example no way of telling whether the data that was used to charge somebody on their phone bill came from the consumer or came from a data file that was obtained and some other way without any involvement of the consumer so the prior law required them to send a freestanding notice through the mail to consumers. many of the vendors said we didn't send a letter through the mail but we have clear notice on the web site, so when the consumers lined up, the consumer knew that he or she was going to be built on the local phone bill and there's no way telling if the consumer signed up and when we did our survey, and this was coupled with any promise of refund this or anything, i think people in our state tend to be pretty straightforward when the responding to this kind of inquiry.

we had just the vast majority of people saying i don't know what you're talking about. i didn't give consent. i should not have been built. 64. mr. mccormick, i want to follow-up to ask you you've had to sit in your testimony that with respect to third party billing that it was valuable to some businesses and consumers. can you provide us further information of how what is valuable and what if we were to ban the practice what are your concerns about the consequences of it because general madigan says she hasn't had an experience where there had been legitimate charges, trying to understand if you can help me with your perspective is on any value to the consumer. >> we would absolutely agree that it's not convenient to have an unauthorized charge put on your phone bill. in the case of vermont, mr. burg

testified that although vermont moved to ban third party billing, even their there were certain exceptions believed to be convenient for the consumer to be able to have certain services segregated on a certain bill. so that any kind of examination in this area - would require some broad understanding of what legitimate businesses do you rely upon this third party billing as both a competitive opportunity and a consumer convenience. so we could try to provide more information for the record. >> i would appreciate it because it think it's important to understand if there is some legitimate purpose what the quinby and with the examples of our given the experience we've heard about from here. >> senator mccaskill. >> thank you for being here and

welcome. i would like to place in the record, mr. chairman, a letter the committee received from a company that is based in my state o'reilly autoparts and it is quite a tale for ten years when they began realizing that they were being victimized by extensive cramming and began hiring people full-time to do nothing but my mentor their building they now have three full-time employees that do nothing but monitor building and the experiences they've had with at&t and others frankly are outrageous and have difficulty to spend for them to curb the practice. the estimate the ten years they've been tracking it over $200,000 of billings hasn't tried in the attempted against their company. the acquire another company just a few years ago and they've done the work on that company. they think they've lost 300

shells and so $550,000 worth of cramming a free ten year period and particularly they are victimized because the open new stores all the time and the numbers are available to the public and if those businesses and the various numbers where the companies obviously are just feasting fraudulently on small businesses and it is the -- they spent $400,000 on their stuff to do this over the tenure period, but the of 150 grand or so as they look at what they've tried to do. now most companies don't do this. most just try to beat it out if they can they try to do their best so let me turn to you, mr. mccormick, and i know to or in an awkward position because unfortunately my wrath is probably going to be directed at you what we know each other and i did you know i manas person and i don't mean to pick on you today but i need to know how much money the phone companies are making on this because they are clearly making

a boatload of money or they wouldn't put up with this allowing people to use their platforms to build because they are getting a piece of the pike. i need to know how much did they make last year on cramming? >> senator, i've been told that the revenues related to third party billing or about one-tenth of 1% of the overall industry. i believe -- >> that doesn't tell me how much it was. i know how much at&t is making. >> i would have to provide the same to care for the record but i believe based upon a letter from at&t the revenues from the third party billing amount to 50 million a year. >> the total industry is seeking 50 million a year off of it? >> that would be at&t. >> that sounds like money to me to the estimate 50 million for third party billing. i'm not saying phoenix $50 million off of cramming but

off the performing third party billing service. and overall the industry is somewhat less than an estimated 200 million, and the overall that would represent about one-tenth of 1% of the industry. >> it sounds like to me if they're going to take the position and the good reputation of the companies are being maligned in a way that i would think they would consider to be inappropriate for significant monday and they are willing to bear the burden of this practice going on. let me ask you this my credit card is used there is a lot of hopes to jump through to use my credit cards online i have to have the billing address to match up with their or not it is

correct there is a pin number all my credit card we have to use that tells the company i have the credit card in my possession. but on the phone companies require years of third-party bill is to get that kind of identification from these people? >> senator, the companies have contracts with of third party had irrigators that require the aggregate your lonely to authenticate the service provider but require the service provider provide authentication of the actual authorization of the charge so those contractual commitments are in place to read the telephone company's audit those third-party agra gators but nevertheless, this remains a very significant problem as the committee staff report itself found after 3 million pages of evidence it's difficult to tell what are and are not authorized

charges. estimate there's not a requirement to give the company that wants to build you get a self identifying number there's nothing for that. if somebody calls my house and migrant child answers the phone and the city want to spend $2 a month to get tv listings in your area delivered to your internet account or wherever and my grandson hangs up the phone. they could start doing that because somehow they got off a modest that's what they're doing. some don't even bother to call. why don't these phone companies say you have to produce from the person that authorizes the services they have to produce to you a pin number that has to match. >> that may be a good idea. the way in which they require authentication today is through

three specific methods. one is through the actual recording of the individual when they are called and that they authorize the surface. number two, on the internet for the double click methods and number three, through the delivery of the welcome packages that are then accepted. they do not use the numbers like they do with credit cards, but they do have industry standards with regards to the authentication. >> i think that if two of the three are very easy to do fraudulently and frankly the o'reilly folks tell me they've listened to some of the recordings and found it as legitimate as some of the rhetoric flying around the capitol right now. i don't think the recordings are even a foolproof and seems to me if there's a simple way obviously it's worked for credit cards and when you would do this when you got a phone line to get a pin number with it and before someone could be charging your

phone number they would have to be able to produce that pin number and i know i'm not giving my pen number out on anything unless it is something i want. seems like to meet with cleaning up quickly and you all could do that on your own without the government getting involved. would you mind taking it to your association finding out what the problem would be providing the numbers and numbers so that number would have to be used if somebody were in third party building? >> i absolutely will. >> that's great. >> how many third party vendors have been disqualified from -- this will be my last question. how many third party vendors are you aware of the disqualified from using their customers' phone numbers? >> i don't have a specific number. >> the would be great to find out. i would like to know how many total vendors the of a contract with and thinking on at&t because the of the most resources to shut this kind of

stuff down, and according to o'reilly they've been difficult in some parts of the country they still can't block with at&t, so i would like to find of from at&t how many third party vendors they have and have disqualified the last years. thank you very much, mr. tran. >> thank you, senator. senator boozman. >> i will defer to senator udall with your permission. >> you sure -- >> go ahead. >> thank you, senator and chairman rockefeller, thank you very much once again. you are steering us in the right direction in terms of consumer protection focusing on this hearing and i very much appreciate it and the fact that you have a attorney general and assistant attorney general. i know that the senator was

aggressive and her state and the both of you are aggressive in terms of stopping these kind of scams and we appreciate your presence today because you bring a very important perspective in mind as and from your testimony that almost all consumers who were crammed were unaware of the charges and did not want or use the advertised services and i think you both recommend the prohibition of third party charges to land line phones. the other concern that all i have, and i -- when we get the innovation and the new uses and we have the cellphone going it's looking at the cell phones and what's happening there. and i wondered do you have any recommendations on how to prevent a problem of this scale

which we are talking about a loss of land line $2 billion or more what can we do as far as cell phones affecting third party billing on cell phones. >> let me give a perspective, senator, the overall complaints according to the sec data it appears 82% of the complaints regarding the land - 16% of them are wireless lines. in the state of philadelphia to the attorney general's office we've seen very few complaints regarding wireless lines. our belief is that the warrior class carriers are much more vigilant and intolerant of third party billing and they've been very aggressive in ensuring they are clean and they maintain their good reputation. and so, again, i would pose that if you ban that opportunity you would prevent that from

migrating from the land mine bills to the wireless bills. many people with this point are starting to rely exclusively on the wireless service as opposed to plant land so you're concerned is a good one but i will tell you we haven't seen the problem at this point at the level that exists but it certainly has that opportunity if we don't cut off entirely >> senator, the one thought i have is it is important once again to look at the issue of the consumer expectations and whether in terms of how you can be built and for what and to see if the expectations are the same in the wireless environment as the landline environment. it may be because of the availability of the various why your loveless services, applications and rent homes and those things can be built to your wireless account in that way an outright prohibition

wouldn't be the right way to go. there are other options you could have a blocking system that could be an automatic block when you open the account and opt out of that which would protect the broad public and the was people who want to be billed for a range of things on their cell phone account. they can do that. >> do any other of the panelists have any thoughts on this issue raised here? >> our company has a service out now which allows people to apply and a phone bill and protect against third-party charges and we are seeing an increase on the wireless side. it's nowhere near as bad a problem yet, but due to the legitimacy of many third-party charges on wireless bills, applications, movies, songs, etc., for smart devices it's going to be a tough challenge to

determine what's legitimate and illegitimate. we do that based on actual hard research of every line item charge so we can then catalog the bad loans and inform customers about it, but a broad prohibition would be difficult but it's going to get much worse on the wireless and i don't think any legislation on the wider line side is going to affect wireless. >> mr. speed? >> i would ask consent to put my opening statement into the record. >> absolutely. >> thank you. >> senator boozman. >> i don't have any questions mr. chairman. i appreciate you holding the hearing and the ranking member being here and participating. this is a problem i think is going to continue to grow and it's not just this area. my daughter was telling me the other day she's a realtor and

she had somebody call and say what you like to increase your sales and visibility throughout the country and she said yes, i would very much like to do that. they took that yes i would very much like to do that and use that as a justification to and about $100 a night. was a very substantial. so i think that there is just all of these areas and certainly wireless is important. in arkansas we are 70% wireless at this point, something like that, something very dramatic and as you see that especially with young people, they just don't have landlines, so it really does go to get rid of a think it's important that we discuss it and we have a lot of differences of opinion from the panel and the panel is excellent and we appreciate you being here and sharing your insight and all of you being on the front lines

fighting the battle in your own way and they don't want to see it happen. the key is how do you do it any reasonable way? thanks again, mr. chairman. >> thank you, senator. it's interesting -- we have to wind up -- it's interesting to me that at&t itself has been crammed some 80 times and i guess my question to you, mr. mccormick, i think there is total agreement on this panel except for you if you're trying to slide off as happens but if at&t is being cramped 80 times

and they probably don't know about the of the area and how can they not know because the of good auditors and counters and are bound to find that. why don't we just take a simple thing and put all of our agony and try to somehow protect often biased charges -- authorized charges but get rid of the rest. why wouldn't we do that? >> millions of sleepless hours. why go through all the tomfooleries hedging bets or is it really clear? what is clear ought to be a monumental blunder as much through the telephone companies that we've done. and we are going to persist on

this one because that's what we do, we protect consumers. why would we be in that so you wouldn't have to -- compromise yourself so much as a witness? >> mr. chairman, from you know with some limited exceptions, the industry supported that legislation. this third party billing represents as i said less than one-tenth of 1%. >> you said blank know how misleading deduce? it does it to eppley and hundreds of thousands of other citizens all across the united states every single year for years and years and years so don't give me this. that's the corporate point of view. so why do you use it? why don't you think about one-half of 1% which don't necessarily agree with?

why not ban it? than the unauthorized billings. give them accurate reason to wake up with a smile. as long as the others we are going to be investigating, too. why not? >> mr. chairman we do ban on authorized billings with regard to banning all third-party billings whatsoever something as a policy i will explore with the industry to see if that is something the industry would like to support. >> turning to the center in the final question and then i will have a closing statement the last 15 seconds. >> thank you, mr. chairman and as a follow-up i certainly appreciate mr. mccormick he will speak with the industry and i look forward to your

supplement and asked so we can have a full understanding that if we were to go that policy direction what would be the full consequence of doing so for consumers as well as businesses. i appreciate that. attorney general madigan, i wanted to ask as they understand illinois passed a law in 2,009 which doesn't have a ban on third party billing. so can you help us understand -- you're asking us to do a complete ban on third party billing. what hasn't worked in your law and what brought you to this position today? >> as mentioned, when we brought our lawsuits we used our consumer fraud act even though the new act has been passed, we have yet to use it. reason we're here is we would like to be more like vermont because vermont has been

successful being able to pass an outright ban, and it is in san we have to spend countless hours in a slightly similar way to what is eppley does. we take in hundreds of complaints and file a lawsuit after we do a thorough investigation, and then we get restitution for many of those consumers but not nearly all of the consumers. what we have seen repeatedly and what you have heard every one testify today is consumers don't know their phone bill can be used like a credit card account and the end up with things they never asked for and because they never asked for then they never knew they were paying for them or used them. the litchi limit that without having to go through the efforts of most people of the panel is to simply van fees' third party charges and yes, there are some exceptions. operators assistance, certain

things everybody knows what those exceptions are. those are things that individual consumers or businesses if they want a firm that if they ask to be put on their bill. it's not a secret mystery that ends up crammed onto their bill when all they have done is their name and their telephone number into an online solicitation to get coupons, and that seems to be the way that many people on the internet into being charged for these things if they were on the internet at all if it wasn't outright fraud. so the level of the fraud and deception that i would say is the entire industry here should be banned outright. >> as a final follow-up to mr. mccormick, if you were having as an industry to basically follow a whole host of different state laws in this area, so you've got to follow the law that illinois passed --

i assume this is what you're dealing with come to don't have prevention in this area. but -- if we are looking at a solution here, would whatever our solution would be that this committee comes up to what is the industry's view in terms of having a federal one federal standard whether it is the banning of third party or some other solution. senator mccaskill raised one here. what is your perspective on that? >> cementer this is primarily in national business, and as these issues have come up we have been looking to the fcc as the principal regulatory agency so it is a great benefit to the industry to have a single nationwide standard.

>> i have to ask the attorney general here if you have any preemption concerns if we come up with a solution. >> we always have preemption concerns of the state level, and i think there was somebody that mentioned the fact you would want to make sure that while the federal regulators had authority to do whatever they needed to do against cramming the states are not stripped of that authority because too frequently unfortunately we find when the solution is that the federal level and the states are preempted it oftentimes isn't strong enough to contend with the problems we have in the state's. >> thank you all of you very much for being here. i think it is a classic american problem. we are not talking about the war in afghanistan or raising the debt ceiling i grant that. but we are talking about

something which is profoundly troubling and disturbing to millions of americans and it is also on necessary. i thought what we were meant to do is try to clear up problems here, and ten years ago they came to us and said we will clear of the problems because they make us look bad if we don't and therefore you could trust us to do it and they did so all i'm saying is we are going to stick with this. the sec stated yesterday it is seeking comment on whether a band third party billing appreciate that and they settle things, the have settlements and the ftc and that is stuff that is already done and is the mission of guilt.

general madigan i want you to know that that's the way i read at the rate in the near future i plan to introduce working with colleagues on both sides of the aisle. the legislation that would put a stop to this because i simply cannot find any grain of sense to us having to have a hearing like this and have -- i'm sorry you haven't got any enough of the spotlight but has [inaudible] better looking than you are. [laughter] why put her to that and the millions of others, why put people through that? it doesn't make any sense. it isn't going to change the future of the nation but it's going to change a whole lot of household functioning and ability to survive in horrible

economic times which are going to be with us for quite some time would be my guess. so i don't think we should mess around with this. let's not worry about whether something is convenient or not or a quarter of 1% or not. let's say if there are certain of the oddest things that should be done let's work on that and figure that out and then take the rest. with that neutral statement, this hearing is adjourned. [laughter] [inaudible conversations]

[inaudible conversations]

this is the great hall here at the library of congress, the largest library in the world. did you ever wonder if you were to read one book a day in this library how long it would take you? you will find lots of answers about this unique library in c-span's original documentary, the library of congress.

airing this monday night. we will tour the iconic jefferson building including the great hall in the reading will. we will show treasures found in the rare books and special collections including the original thomas jefferson library and presidential papers from george washington to cut off and coolidge, and learn how the library is using technology to discover hidden secrets in the collection and to preserve its holdings for future generations. join us for the library of congress this monday night at eight eastern and pacific on c-span. oh, to read every book in this library, one per day, it would take over 60,000 years. the chairman of the house oversight subcommittee on national security says that despite spending billions to enhance security, airports are still vulnerable to terrorist attacks. those comments came during a hearing on securing airports parameters. witnesses include the former security director of vv

international airport in israel. this is a little less than two hours. [inaudible conversations] >> good morning. the committee will come to order. i appreciate dewaal been here for this oversight hearing part number to regarding the tsa airport perimeter screening. i'd like to welcome a ranking member tierney and members of the subcommittee and the audience here participating with us and those of you that are watching on television. today's proceedings are the second to evaluate the status of u.s. airport security and the policies employed by the department of homeland security. there are a number of concerns that have been highlighted and drawn-out here today. first and foremost, we have learned that there have been 25,000 security breaches at u.s. airports since november, a 2001, and i appreciate the tsa trucking and providing the data but obviously those are the ones we know about the concern is

what about the ones we don't know about and the creativity and things that can happen in the future. we are also deeply concerned about the failing to contact threat vulnerability assessments in order to identify gaps and reverse screening. to thousands lined the gao concluded there were 87% of the airports that have not had the threat assessments done and that number really has not changed. tsa also lacks the national strategy to secure commercial airports and access controls. this again coming from a gao report that says the nation's 457 commercial airports have not been guided by unifying national strategy, and of quote pick also concerned about more than 900,000 -- 900,000 security badges of the 457 airports and the danger that can lead to and the challenges that presents. also concerned at what is happening at some of the nation's airports for instance at jfk investigative reports show what least a quarter mile of the perimeter fence is done

leaving a gaping hole along a major jfk from way. this project is four years behind schedule. also concerned about what happened at the dallas love field the defense has been briefed almost 20 times in less than five years. in fact air traffic control shows pilots on the ground were not sure what to do when a pickup truck crashed in drug under the terms of august 19th, 2010. one of the pilots inquired what the protocol for something like this? if he's coming at us can we move? airport control position bhatia. also concerned what's happening at l.a.x.. the 8 miles of the cents in the stages in the decade and yet no one consistent standard has happened. we have spent nearly -- we will have spent nearly $500 million on a i.t. machines, called the whole body imaging machines. by the time we get to the year

2013 coming into these machines, they're parts of the gaps in the security that don't work. i happen to believe that there is a better and smarter way to do this that is more secure, less invasive, and we are going to hear testimony today talking about the canine units and what they are able to do and i look forward to hearing that testimony. we are also concerned that these machines are whole body imaging machines wouldn't count some of the weapons that were attempted to be used on december -- in december 2009 incident. and the list goes on. tsa spent millions and millions of dollars on technology that hasn't worked and remember 5207 covered machines after spending $200 million having those deployed, those were put back on the shelf. the challenge before us is grave, it's real. we have to deal with that threat and security of a threat to the nation. it's not going to go away. there is no end to the creativity of terrorists. and while i have heard the press

account say let's remember that the 25,000 security breaches are 1% or less than 1%, unfortunately we have to be right all the time. terrorists only have to be lucky ones. a lot of what we have been participating in my personal opinion has been security theater and hasn't done the job to secure the airport to the degree that we need to. i think one of the personal challenges we have as a nation is how to become more secure and get less invasive that we don't give up every liberty in the name of security. and we have to find the proper balance. it's difficult knowing that the threat is real. i look forward to the hearing today. we are going to also -- rather than by exxon i would love to hear from the panel but at this time would love to recognize their drinking member of the subcommittee, the gentleman from massachusetts for his opening statement. >> thank you mr. chairman and witnesses for being here as well. the understand you're going to address important issues and one of them for instance is the

screening of passengers observation techniques of the program. our general accountability office has criticized that s.p.o.t. program saying that it lacks the proper scientific validation. the part of homeland security as we used to study shows more effective than random screening but it does acknowledge it didn't address whether behavioral analysis is actually an effective way to detect potential terrorists. there's been $750 million on or off the asking for another 250 million. i think it's critical that with that significant investment would take a good look and scrutinize whether or not this program actually is effective at identifying the potential threats to security. we will also discuss the screening of the check the baggage using the explosive detection technology. congress mandated this checked bags by the transportation security agency but it's been slow to implement the data across the country. the general accountability office said despite the regulations being in effect in

2005, the detection technology requirements were put in place in 2009 turning the issue of perimeter security there is the high-profile breaches we are all aware not. specifically we are here about an incident that occurred on outside of boston's the airport where a young man fell from a plane as an approach for landing. according to news reports, he likely gained access to the plan after breaching airport from the security in charlotte. this is not a unique incident unfortunately. we've also heard about the security breaches by mr. ronald wong was somehow able to make a entrée plane leaving jfk from new york to san francisco with a stolen boarding pass. general accountability office also raised concern about preminger security in the nation's airports. into this in mind and found that the field to implement a national strategy to address the perimeter security and also a small percentage of the airports completed the joint portability assessments to read this again raises a serious question that

has to be addressed. as we evaluate incidents and the challenges it's important for us to take the time to understand what security functions the transportation security administration is not directly responsible for. and one of those is the perimeter area. they are not principally responsible for the perimeter security at airports, that perimeter security is primarily responsible in the airport operators while tsa's laws to insure they are adhering to an appropriate security plan that meets federal standards. so as i said at the last hearing on tsa, the agency has a difficult and enviable task but it's our responsibility to provide constructive criticism with which tsa can strike the balance between security convenience and cost hopefully have lee on the security aspect. i hope the hearing today can help tsa to that and i thank the chairman for bringing us together. -- before. i recognize the chairman of the subcommittee and also the subcommittee, the gentleman from

florida, mr. micha. estimates before mr. germany and mr. tierney for your leadership and also pursuing very important issues relating to transportation security and holding a very important agency accountable. having been involved in the tsa and actually take the name for the agency and helped craft the enabling legislation some ten years ago i had a chance to monitor its activities closely, and unfortunately i become more and more concerned with the billions of dollars that are being expended some of it just astounds me. ..

and the airport is located on about a 16-foot embankment that actually is an embankment across the entire length of the airport. here's the front of the airport and here's the embankment, 16 feet high. and just to show you we are talking about airport security and reminders, how idiotically could idiotic we could be in implementation of any requirements like this, but this is the parking space for rental cars. this is the 16-foot embankment.

you can see up here where cars go through the entrance of the airport. now there is a new airport administrator. he wasn't familiar with all the details but we are going to do a thorough investigation of this. this is just one instance again of the nonthinking agent. i don't know of any explosive device that could possibly penetrate 16 feet here except maybe a nuclear weapon. i don't know how much it costs them but these barriers here. again, forcing a small airport or it tsa paid for it, and idiotic expense, not to mention the cost to the taxpayer or the airport but then of course they would never consider the economic loss to the car rental firm or to the revenue of the airport.

but, everywhere i turn, i see a disregard for the taxpayer. this is just one instance and one small community. again, just an unthinking agency. there've budget is what? and a 8 billion-dollar range? then i opened the paper a week or two ago when i return to returned to washington and i look at this ad. of course, the humane society is looking for a vice president of federal affairs and they have a little, i would say it is about a six booklet page but a four-color half page ad for deputy assistant administrator for legislative affairs and this and other capitol hill publications, halfpage. the only total disregard for taxpayers resources could you

expand money on whether it is a venture like this by state capital airports capital airports or in a capitol hill publication. i'm going to request too and accounting for expenditure of this. let me just tell tsa too that if you refuse to cooperate with my committee, the transportation and infrastructure committee, i have had and will continue to have the cooperation of both this up committee on which i serve in the full committee, mr. issa and the chairman here who have agreed to cooperate to get this information and they will get the data, whether it is this or other activities such as you have refused to provide information to us on. regarding your expenditure of your national deployment force where you can't hire people or

people leave their jobs and you have to fly the men, put them up at hotels, pay their expenses and pay them a per diem. whether it is that issue or more than a dozen pending items. we look at the information. we will investigate. we will protect the taxpayers who are paying the bulk of the expenses for this fiasco. so thank you for holding this hearing and we will get to some issues and questions in a few minutes and i yield back. >> thank you. i will now recognize the children from massachusetts, gentleman from massachusetts mr. lynch. >> thank you mr. chairman. very briefly, obviously the interest of airport security is a tremendous one for all of us. i know that we have spent enormously on the safety and security of the processes within our airports but this is

something that the security of our perimeters of these airports have become much more of a concern since they fairly recent incidents that involved my district. the young man who was apparently stowed away above -- on an aircraft recently from i believe it was south carolina to logan airport in boston, actually was found he ceased in my district in the sum -- town of milton and my district. so i was able to see up close the tremendous concern generated by this, the hardship on the family, theforcement involved ts well, and obviously the concern within the aviation community. so i think it is worthwhile to spend some time to redouble our

efforts, to focus our resources on an area that we believe has been neglected. and i want to thank the witnesses here for their willingness to come before us, to help us with this task, to help the committee, to make sure that we are being thorough in our examination, that we are not overlooking anything and as a result of this incident, and some others, that at the end of this process the american flying public will be safer and our communities will be safer. and our airports will be more secure. that is the goal here for both democrats and republicans. that is our intent here, and again i want to thank the witnesses for coming before this committee to help us with our work. i yield back. >> thank you. i would like to now introduce our panel so they can be

prepared for their opening statements. mr. john sammon is the assistant administrator for the security administration and we appreciate you being here. mr. stephen lord is the director of the government accountability office. mr. jerry orr is the aviation director at the charlotte douglas international airport. mr. rafi ron is a president new age security solutions and the former director of securities tel aviv in carrion airport and inspector william parker is the commander of amtrak police department k-9 unit and we appreciate you being here as well. pursuant to committee rules all witnesses will be sworn in before they testify. please rise if you will and raise your right hand. do you solemnly swear or from the testimony you are about to get this committee will be the truth, the whole truth and nothing but the truth? thank you. let the record reflect that all witnesses answered in the affirmative. in order to allow time for discussion we would appreciate

if you would limit your verbal testimony to five minutes or less. your entire written statement will be entered into the record. so with that we will start with mr. sammon and you are recognized for five minutes. >> good morning chairman chaffetz, ranking member tierney and his spinning dish members of the committee. i appreciate the opportunity to appear before you today to discuss transportation security administrations responsibility regarding her matter security and u.s. commercial airports. i would like to emphasize three points. first, every airport has individualized security plans up with security, perimeter security is an important piece. two, airport authorities are responsible for executing the plan. three, tsa is responsible for approving the plan and inspecting airport compliance of the plan. unlike checkpoint security airport authority people and investments play the lead role

in carrying out airport for a matter security. tsa conducts airport inspections to enhance security and mitigate risks associated with her matter and take ready including joint vulnerability assessments, special emphasis inspections and the testing of access control processes at airports. tsa analyze the results of these inspections and assessments to develop mitigation strategies that enhance airport security posture and to determine if any changes are required. parameter related airport compliance has been inspected 27,031 times over the past months. every commercial airport receives an annual security assessment to include an assessment of grandmother and access controls. earlier this year tsa's office of security operations initiated a special emphasis assessment and special emphasis -- inspection of all airports evaluating perimeter security

and including sensing, man-made barriers, natural barriers, closed-circuit television, electronic intrusion, and motion detection devices. assessments are complete for the largest airports with the smaller airports expected to be complete by september 30 of 2011. the results of the inspection more collaborative improvements and also violations which may result in civil penalties. going beyond compliance, we work collaboratively with airport operators and airport associations and in that collaboration tsa issued a dated and improved security guidelines for airport design and construction as well as an innovative measures report which highlights best practices from airports of all sizes across the united states. the innovative measures report effort was the first of its kind in working closely with airports across the nation on baselining the best practices in the airport perimeter access

control, terminal frontage is another key areas. over 700 measures and practices from over 100 airports were assessed as far as this groundbreaking initiative. because of that effort airports now have self-assessment modules and a resource allocation tool. the tool incorporates the attack scenarios, vulnerability scores, consequence scores and countermeasures success probabilities. it allows airports to baseline their security programs against other airports in innovative measures that will directly informed decisions about improvements to provide the greatest risk reduction for their money at their location. tsa's goal is to work with airport authorities to stay ahead of the threats while protecting passengers privacy and facilitating the efficient travelers and legitimate commerce. tsa airport grandmother security and's are one part of that conference of deferred. i want to thank the committee for the opportunity to discuss

this important issue and i'm pleased to answer any questions you may have. >> thank you. we will now recognize mr. lord from the government accountability office. we recognize you for five minutes. >> thank you members of the subcommittee. thanks for inviting me here today to discuss aviation security issues. the attempt to thousand nine christmas day attack or bite of a bitter civil aviation remains an attractive terrorist target and the scores they imports at today's of today's hearing. securing commercial aviation operations is difficult given the hundreds of airports, thousands of daily flights with millions of passengers and pieces of checked baggage. the tsa spend several billion dollars each year to help secured the system however risks remain. today i would like to discuss three layers of the system. first tsa's behavior detection program also called spot, airport or matter and access controls and finally tsa's check

tag screening system. first regarding regarding tsa's behavior detection program, dhs has taken actions to validate the underlying science of the program at based on our past reporting more actions are needed. as we reported in may of 2010, tsa deployed its program on a nationwide aces without first demonstrating it was based on valid science. according to tsa s.p.o.t. was deployed before a validation was completed to help address potential threats such as those posed by suicide homers. the good news is dhs completed an initial validation study earlier this year and found that the program was more effective than random screenings in identifying so-called high-risk passengers. however as noted in the study, the assessment is just a first step. additional research is needed to fully validate the program.

some recommendations made in the latest dhs study mirrored those we made in our may 2000 report. in some it is still an open question whether behavior detection principles can be successfully applied on large-scale for counterterrorism purposes and the airport environment. i would now like to discuss some of the key findings from our 2000 report on airport perimeter security. in terms of progress we noted various steps tsa had made including implementing random worker screening programs, expanding requirements for name-based background checks and developing new biometric security standards. however we found that tsa had not at the time completed a comprehensive risk assessment as called for by dhs. tsa subsequently completed such an assessment in july 2010. however the date of the assessment did not include an assessment of the so-called

insiders thread which tsa views as a significant threat. the risks posed by insider threats will be included in the next update due later this year. we also recommended that tsa consider making greater use of joint vulnerability assessments. these are a key tool in the tsa toolbox and are completed in conjunction with the fbi. the latest data showed tsa has complained it joint vulnerability assessments on about 17% tsa supervised airport and 83% of these airports are on ss. the last one i would like to discuss is tsa's evers to deployed checked baggage screening equipment. this program is one of the largest acquisition programs within dhs. it is highlighted in the report we released representative mica yesterday. tsa has upgraded the explosive detection requirements for this equipment but faces challenges in meeting these requirements.

the explosive detection requirements for checked baggage machines were established in 1998 and subsequently revised in 2005 and 2010 to better address current threats. however, tsa's current checked baggage screening systems to not make the 2010 requirements. some of the machines are operating at the level established in 2005 and the remainder operated at levels established in 1998. are report describes some of the challenge is tsa faces in procuring this very confiscated technology. example diaz jays and tsa encountered challenges safely collecting data on the explosives, physical and chemical properties per car report contains six recommendations for improving tsa's process for acquiring the sophisticated systems. the good news is that tsa has agreed to take action to implement all six of these

recommendations. mr. chairman and other distinguished members of the committee this concludes my statement i look over to answering your questions. >> thank you. we will now recognize mr. orr the operator of the charlotte international airport. we appreciate you being here sir and we are recognized for five minutes. please turn on the mic and maybe move it closer to you. that would be great. thank you. >> mr. chairman and members of the sick -- subcommittee on the aviation director for the city of charlotte as charlotte airport. i have worked for 36 years and airport management and was a small-business owner for 13 years before that. i'm here today to testify a on airport perimeter security. i have been critical of the performance of the tsa since its inception. i am not critical of its nation. i'm critical of its measures. in my judgment the effectiveness

of the tsa is compromised by a rigid attitude of arrogance and europe are see. in november of last year the body of a young man was discovered in else in massachusetts and thought to have fallen from an aircraft. i learned about a possible connection to charlotte in the media and therefore reached out to our federal security director. he did not want tsa to take the lead and instead recommended municipal police department to head up an investigation and tsa would assist them. ultimately be invaluable evidence could neither prove nor disprove that a security breach had actually occurred in charlotte. the police and tsa theorize how the young man may have accessed an aircraft. they came up with a reasonable assumption about what might have happened that excludes entry through a checkpoint. but the report fails to acknowledge that they could not conclusively rule out this possibility because tsa had failed to preserve their

surveillance video of the checkpoints and some of it was lost. i'm not saying that the young man came through a tsa checkpoint that what i am saying is that tsa failed to even admit the possibility and collective attention elsewhere. this mentality serves to protect the agency at the cost of real security needs. the investigation focused national attention on airport premature security and charlotte we have 19 miles at six-foot high chain link fence with three strands of art wire and enclosing the airport. this fence meets all federal requirements. we spend spent a half million dollars annually on maintaining the fence all from the airport budget. we spend an additional $3 million on personnel with perimeter security responsibilities. the fence is a deterrent. it says keep out. however, the final security is the eyes and ears of the 20,000

people who work inside the fence. tsa seems to believe that airports are automatically in violation of the regulations, even when they did everything they were obligated to do and it simply didn't work. to me that is like saying the customs and border protection itself is violating the law each time a new illegal alien crisis since the united states. other examples of tsa's lack of partnership. recently we asked tsa to explain their legal authority for attracting us to do something. ts failed or refused to respond or even acknowledge our questions. tsa has conflicting roles in operational and regulatory capacities that are not kept separate and when an agency interprets the rules and implements actions lends itself to the possibility of abuse.

i am confident that i'm not the only airport operator was significant concerns about the effectiveness of tsa. an adversarial relationship between airports and the very agency entrusted to safeguard them is clearly detrimental to the goal of safety and security. what can be done to improve our policy to focus on the real needs of our nations airports? congress should continue to support allowing airports to opt out of using tsa and ensure that the bureaucracy does not throw up arbitrary roadblocks to discourage us from pursuing this alternative. any entity working with airports and airlines to achieve security must do just that, work with them. tsa's current culture does not foster respect. i also believe congress should redirect some of the available funding for airport security from tsa directly to airports. the operators most familiar with airports vulnerabilities end

strength and as well as quick to make effective enhancements. safety and security are always our number one piracy. there can always be more security but the challenge is to provide that are security. we need to spend money where it counts on things that matter. it needs to be reasonable and collaborative. with airports are given the resources we need and picture partner for security the traveling public will be. >> thank you mr. orr. we will now recognize mr. rafi ron at ben-gurion airport. you are recognized for five minutes. see. >> thank you mr. chairman and members of the committee for inviting me to testify today. i would like to draw the committee's attention to the three factors that i believe are playing a key role in many of the shortcomings and airport

security. the first one is the imbalance that was created shortly after 9/11 when tsa had the overwhelming task of recruiting training and installing technology in airports around the country, something that is the backbone of tsa's operation and influence of security at the airports. at the same time the airport facility security has received much less attention, and not only a screening of passengers where most of the attention and the funding went into, but it was also executed by a tsa why the rest of it was left for the local authorities to take care

of. something was relatively short and the standards for performance of the security task on the local level are not very clear and in many cases they did not even exist, and the point or the issue of perimeter security is a very good example for them. i think that traveling around the country, one can easily notice that worst of all there that there is very little consistency in our airports as far as security is concerned. secondly, most of the airports today are still not protected by an operating perimeter intrusion detection system. and other terms, we don't know when a breach occurs.

we get to know that only when it is addressed by somebody or when we end up with a stowaway making his way to the rear well and certainly enough losing his life. this is not a reasonable standard compared to those on the passenger screening operation. the other aspect of that is that the issue of jurisdiction is not very clear. when it comes to the security operations, security facility of an operation at the airport, by law it is local enforcement agency or department that is responsible to do this, but yet most or many of the police departments that provide service

in airports bear role is more of an agent -- and there is a major difference between the two. once again if you look at premature is a reflection of this problem, you can see that the role that the local police department is taking on perimeter security at airports is minimum and usually based on responding to cause rather than an early detection prevention. so, i think there are two areas that have received much more attention. one is the role and the funding of the local authorities as far as the airport facility security is concerned and secondly the need for standards that would create persistent, high-level

performance that will characterize the security in airports around the country. a thank you very much. >> thank you mr. ron. a little bit of explanation here as we introduce inspector parker. you may be curious as to why we might invite someone from amtrak. amtrak police to be here at a hearing regarding airport security. one of the questions i think that is a legitimate one that this committee would like to explore is while the tsa has invested hundreds of millions of dollars in whole body imaging machines and technology, there are those pretty ailing at the pentagon who have come to the conclusion that dogs are the single best way to find explosive devices. i would like to ask unanimous consent to introduce into the record -- there was a press conference by lieutenant lieutenant general michael owes that says quote dogs are the best detectors and i would point

to this. i know all good americans get this magazine, airmen. and there made gin 2011 edition says there's no technology proven more effective than the detection of explosives in the k-9. there are questions as to are we investing enough in technology that we know that work in canines according to the pentagon having spent literally tens of billions of dollars? again without waxing on to much more we do truly appreciate inspector parker being here and it is a good of explanation. is going to give a bit of testimony then we are going we are going to have a demonstration. i will let him explain how we are going to conduct this. we would ask anybody here in the audience they put if you have some sort of something. we are glad that you are here inspector parker. we are going to do a bit of a demonstration. we ask that you hang tight what

we do this demonstration appreciate the leeway here is we do this demonstration. inspector parker we will give you great leeway. >> good morning mr. chairman and ranking member tyranny. my name is william parker and i'm the inspector commander of the k-9 unit. i'm honored to be here and i appreciate the opportunity to explain. well-trained dog is more capable, useful reliable and effective. dogs and not to urge -- depreciate like machinery. dogs are trained properly and their training is consistent their skill level will increase with expense. perimeter security is a great concern to airport and transportation administration. many airports rely on surveillance being the cameras to protect their primers. the problem as if nothing appears on the camera after the alarm goes off you can't just assume it is there. someone had to respond to make sure no one is -- from the

camera and well-trained law enforcement officers with the well-trained patrol that can find a thread immediately without waiting for backup. after september 11, 2001 we use dogs intensively to sweep airport terminals. the dogs were used to sweep for explosives in the morning before the terminal opening in the evening when the terminal closed. i saw a real surge in interest in k-9 capability after 9/11. as people realize realized god for effective and crowded them garments where there is closer screening abilities were better in crowds and technology. amtrak trains the explosives for forwarding keeping a closer team president the boarding gates to provide a capability and immediate response. egg think a dog on on owner jetway on a jet whiteboarding wedding through security at non-convenience of travelers and would provide an elevated sense of security. dogs are very effective not only into texting explosives but as a

deterrent and many of in bright -- any remnants when deployed properly. amtrak has many challenges particularly the need to secure open space areas. we have been able to implement some new procedures that could be used in airports. i have helped pioneer new applications of canines called vapor waits. vapor wages of trained dogs to smell the wake of explosive material in the air after person passes by the area. amtrak is working with agencies to develop this application and other agencies such as tsa are starting to use the paperweight k-9 method. in closing i would like to reiterate my position that they could k-9 or graham is an excellent investment for any agency that needs to secure high-traffic areas or facility parameters provided the program is properly funded and supported

with a strong infrastructure. to this point i i've brought two teams with me to give a brief demonstration. after we conclude that the mom i would be happy to answer any questions you might have an thank you again for this opportunity. what you are going to see in this demo sir is that i explained to you about vaporware technology. the dog will be a will to detect people that walk by. it is not intrusive and they will not stop anybody's path. you are going to see two, or am i right in her less. we are going to people come to the door and as you see the dog is pretending she is at a checkpoint. people will come in and the dog will be able to detect who came in with something on them.

we are just waiting on the crowd. as you see the dog is not interestedly hurting anybody. as you see that person walked by, did doc is walking, walking. as you see this is the response the dog will give and that is a person. this individual has ankle weights on that has explosives on his ankle so you can look at him physically not see see anything that he has about five pounds of explosives on his ankle. could you show the committee, sir?

and that is smokeless powder. the second demonstration we are going to give -- okay you can move. the second magician we will give is like i said when that person passes through the area -- [laughter] as a person passes through an area you see a person walking through the room right there. over there tier so she is going to walk and sit down. we are going to have a dog come through the same area and that person has already sat down. the dog is going to come in and follow the scent where the dog person walked two and determined where she is located at.

they are trying to give them a little bit of time because in theory someone. [inaudible] and that is a scientific fact that has already been noted. he good girl.

let's give the dog a hand of applause. [applause] thank you for this opportunity and any questions you may have. >> very impressive. appreciated. i'm going to recognize myself for five minutes as we move to questioning and we will go from there. i want to start with mr. sammon here and the gao. the gao in a report released out today dated today, on page 12 and 13 it says our analysis of tsa data show that from fiscal year 2004 through july 1, 2011 tsa conducted joint vulnerability assessments at about 70% of tsa regulated airports that existed at the time thus leading about 83% of airports on assessed. how can that be? in 2009, september 2009 there was a warrant issued but said 87% of airports have been over that timeframe we have gotten

that number to 17% assessment. >> the joint vulnerability assessments are done in concert with the ei. they are done through extensive assessments and done in a limited number of it locations but every single commercial airport receives an annual security assessment. >> wait, wait, why aren't they are 100% jda's done? is the goal not to get to 100%? >> tsa does complete a security assessment including the permit of all airports year including we have done 27,000 inspections. >> i'm asking about the joint. >> there are different assessments. >> what is your goal? do you have the goal of getting to 100%, yes or no? >> we have 450 airports with the fbi every year, no. >> is not even every year. it is some point.

i mean mr. lord you have looked into this. what were your findings in this particular area? >> when we first looked at it the number was actually 13%. that was from the 2004/2008 timeframe and we as tsa for updated analysis but the numbers have actually gone up. is now 17%. these are very intensive examinations focused on high-risk airports and tsa considers them for gold standard. they obviously conduct a conducted whole host of other activities and inspections and testing. i mean there are quite a few things they do but you know we thought this was a worthwhile to single out given the significance. we do recognize it is difficult to do quickly and you have to get the fbi fbi involve. >> what i don't understand is given big imperative, given the knowledge and understanding that we are only as strong as the weakest link in a maybe that

small airport as we saw on 9/11 when a person got on a plane. not one of the major airports initially and got behind the security lines. why is the tsa not demanding and working towards getting to 100%? there are 457 airports. why aren't 457 airports getting this jv a done? >> this level of assessment will be done in a limited number of airports. mattair port -- not all airports will be done. >> i absolutely don't understand that. i think it is unacceptable. let me move on. mr. mr. orr in your testimony said the tsa is yet to approve this airport security program. i think you said in your testimony quote we have been trying to get revisions to our approval for about a year now. can you explain a little bit more, please? >> yes, sir. we are required to man our

security plan anytime there's a change in our security procedures and we submitted an amendment to the local federal security director over a year ago. heard nothing for six or seven months. comments, address that comment. it again lay idle for a couple of months. then our system security director that we have been working with disappeared and a new one appeared and in the process started all over. >> mr. sammon do you care to respond to that? >> as i understand the request to change the security plan was initiated about a year ago. there was a joint vulnerability assessment with the fbi conducted in the fall of 2010. it is my understanding and i don't know this personally but it is my understanding the

parties at reed to a let's hold off completing the rewriting the airport security plan until they understand the results of the joint vulnerability assessment. now the joint vulnerability assessment in terms of its analysis of premature security was not particularly flattering. in terms of where the amendment is, in terms of rewriting it i think the parties have a great. >> it sounds like it has been waiting for a year. do you dispute that? >> both parties agree to wait until something you brought up last time is the joint vulnerability assessment and i should be very insightful in terms of what you do if your security plan. >> mr. orr? >> we have had to joint vulnerability assessments, one in 2007 and one in 2010. and at the conclusion of each one we asked for additional information to help us understand what you are talking about here.

and in both cases have not received that. we submitted our plan and our amendment. we heard nothing. we checked on it a couple of times. they said it was in the works. >> this is the frustration. you are telling me that you have no goal to give 100% of joint vulnerability assessment on the 450 airports? you made improvement from 13% to 17% of them we have an airport where you have done to jda joint vulnerability assessment and you are not getting the responses. you have people all across the country and you are supposed to be the expert in the middle of this. that is the concern. my time is expired and now i recognize the gentleman mr. tierney for five minutes. >> mr. lord, this joint vulnerability assessment, what is your analysis of how likely it is that 100% of the airports could undergo that particular scrutiny every year? >> we don't think it would be

appropriate to do it every year but perhaps on a rolling basis. that is how they do it now. they have a target within a three-year timeframe. they try to focus complete jda's on airport. obviously they are expensive and you need to get the fbi's cooperation. >> currently there is a three-year ruling planet to 100% of airports within that timeframe? >> that would be difficult to achieve under our current process. i would defer to mr. sammon on that. he would know more about that. >> but it is your understanding that is the plan? >> is not the plan. it -- is mr. sammon stated the current goal is not to do 100%. my point is they do them on a rolling three-year base is. >> mr. sammon how many things i risk assessments would be done on a three-year base is? >> i would have to back -- get back to our british and people and i would be happy to respond

to the committee on that. >> would be 50%? 25%? >> i would have to check with the fbi. >> we need it the i cooperation? >> review the project, sign off and so on and so forth. is not a tsa -- we don't run this thing by ourselves. >> mr. sammon we talked about the screening passenger observation techniques programs, the spot that are graham. can you differentiate that from the usual type of random searches? >> yes. essentially i think the earlier witness on the panel mr. ron is an expert on this but what you are looking for our mike or facial anomalies. in terms the way people are behaving particularly the facial movements they have as they approached a checkpoint. the s.p.o.t. programs result in more than 2000 arrests since 2006 and for people who have had her hats criminal and other

kinds of fraudulent or illegal activities they were engaged and at the science is based upon microfacial anomalies and the way people look and that is what they are trained for so it is more than randa. you are looking for people and looking at the crowd, looking for people in that context to have some -- somewhat aberrant looks. >> we are about three-quarters of billion dollars into that and every quarter we asked for it. is that worth the money? >> i think that the investment in the behavior -- certainly make sense. all the rest they are doing is related to detection of items and i think 10 years after 9/11 with the attempted attacks that we have had during this period of time, we reach the conclusion that we need to spend more attention on the people rather than just on the items.

observing the behavior is one of the basic tools that can be used at the airport but obviously it is only one single tool and a much wider and more complex strategy. >> what kind of technologies involved in the s.p.o.t. or graham? >> it depends on the way you define technology. if we are looking at technology from the point of view of the machines that are involved or computers that are involved in the process, this is not a highly technological process. this is more human-based process but there are certainly broom to extend that into the technological area by use of surveillance technology and not just cameras out there but those that can identify certain types of events or behavior and respond to it. >> at the granular level it

could be done with train human trained human beings exercising the process that is involved? >> wow right now it is mostly training human beings. >> i would imagine you would start getting remote possibilities in their and the cost could be enormously talk about all the airports that are around. >> that is correct. >> i want to quickly come he talked about having a local entity being able to opt out of tsa on that. if your organization to that which you be willing to take full responsibility and liability force failures to proceed? >> yes, sir. i have that anyway. >> i yield back. >> now i recognize the chairman of the transportation committee, mr. mica of florida. >> thank you. mr. sammon, as of last week my figures are you had 3905 people in washington supposedly working for tsa and 27% of them were in

a supervisory administrative capacity making an average all of them over $104,000. how many of those folks were dedicated to doing things vulnerability assessments we have been talking about here? >> in terms of the vulnerability assessment i was would say limited number. >> a ed doesn't come at the dozen? >> i would like to give you a truthful answer. >> could you provide that to the committee? next to have 9656 administrative personnel out in the field. how many of those folks are involved in the owner ability assessment? >> those are administrative people, not screen screeners. >> i would have to. >> they are having trouble getting back with people like mr. orr i see because the vi and other agencies don't cooperate.

that is your explanation today? >> no, sir. in terms of the asp i will look to it. >> couldn't possibly have some of the people making over $100,000 maybe they get for the record the number of people making over $100,000 at the airport. none of those people could check off on a security plan to protect the perimeter of the charlotte airport. if you set the protocols and standards in washington? >> the plan is worked out locally with airport director and the fst and it has improved. >> but it took six months to even get a response? can't you understand that frustration? the other thing mr. orr if anyone contacts you and there is any intimidation after your testifying here today or any indication that they are giving you a hard time in and anyway i want you to let this committee know immediately. i have seen the way these people

operate, the intimidation and you are pretty brave to be with us today. what is the current most serious risk that we face? >> i think right now in terms of nonmetallic explosives on airplanes coming in from overseas. >> that is a good point. actually, mr. pistole he said way back in november of 2010 that we were in risk management business, being a risk-based intelligence organization. that is what he is trying to achieve and i support that old. do we have a plan from tsa you could share with us to move towards that? >> i don't have a plan today but i would recommend the committee work with representative pistole. >> can you write us with an update rum roman emperor you go or where you are going without

plan? >> i will tell you he is working on a number of alternatives and he hopes to announce something soon, this summer. >> we are looking forward to that and you mentioned most of the risk is coming in from out of the united states. for example the shoe bomber, mr. reagan amsterdam the christmas day bomber, the london liquid, the yemen toner. the last count we had under 100 tsa personnel overseas. it was really 54 when i checked. do you know what the number is now? >> i don't know off the top of my head. >> can you get in contact with the secretary of state or others in trying to increase the presence of tsa overseas? >> we work with overseas countries. >> could you provide the latest context with the department of state and others to the committee because he said the threats coming from there.

whole body imaging equipment which we spent a half a billion dollars on and the deployment. i mean we are probably in in the billion-dollar range. at the smart 16 hearing i asked the question, we know that terrorists are moving to body cavity answers and surgical implants. does the whole body imaging equipment direct this kind of -- can it detect this kind of threat? the answer from all of them, the experts was that it does not work as the eye can't discuss it in the setting but i would happy to have a. >> they said it did not. we have known since this ebc news repeat -- release from 2009, september 2009 that terrorists were now moving. in fact they used a bomb on a terrorist implanted and it lieu up in front of a saudi prince

who killed himself. i mentioned this back end, what was the date? march. that appears to be a threat, the death obviously they have gone from shoes to diapers to liquid to cartridges. wouldn't you say that it looks like the audience plan might be the way to go? >> i dispute the bbc report again i can't discuss it here. >> there is no dispute. the out of the guy. >> sir, i will be happy to discuss there. >> in any event and i mentioned the senate was also mentioned that the equipment we spend a billion dollars on, can't do anything about it and tsa finally gets july 6, get saved recently reefed intercarrier to provide greater insight into a intelligence indicating terrorists to target aviation.

and the name specifically the threat of a body implant as a threat. is that something you issued? >> i would be happy to discuss the specifics of that i classified setting, sir. >> you can't tell me? >> we have spoken to their lands and talked talk about security. >> particularly in july did you tell them that might pose a threat before then? >> we have been working on nonmetallic threats for a considerable period of time in a specific threat was based on specific intelligence. >> the testing of that equipment both by this committee and directed by gao has been unsuccessful both in reports that it been published and also gao reports that also look at your backup system, which is the s.p.o.t. program which they termed almost a total failure. >> i think mr. ron.

>> in addressing this risk. >> i totally disagree with you in terms of what you are looking for other alternatives to get around technology is people tend to try to design and. >> are you aware of the hearing conducted by the science and technology committee where mr. brown from georgia, the chairman, questioned the current application of the standoff a hager detection which you employ now versus the act gives questioning which is done under the israeli system of? >> i think they're both very good. >> everyone he testified, every expert said that the tsa's current procedures a total failure and they further validated the findings of gao. and again i had that two weeks ago to be in tel aviv at ben gurion airport to see how it was

done and they can be done on an interactive basis even with a large population if we go to risk-based rather than hassling innocent americans or veterans, military, children and people who pose absolutely no risk and i yield back the balance of my time. >> i would encourage you to speak with administrator pistole. >> we try to get the senior most people to come before this committee and they refuse. that is one of the great frustrations. no surprise to tsa. i would love to work with them, love to work with them but that doesn't happen and that is that frustration to the committee. >> mr. chairman let me continue a point of procedure. i would be willing i will advocate that we do subpoena the appropriate verse and out. they send is people like this you cannot provide us with the information. this is the chief investigative committee of the united states house of representatives. they are going to appear one way or the other or corporate one

way or the other and put them on notice again today. >> i now recognize the gentleman from texas for five minutes. >> thank you very much. i appreciate it and sitting on committees that have the most jurisdiction of the tsa, said on this committee and mr. mica's transportation and infrastructure committee and homeland security committee. these are issues that deeply concerns me and my work with congress and i'm happy all are here and happy to be able to discuss this again. i am probably the -- i've got more tsa pat-down since i've been in congress that i've gotten pat-downs from my wife. since the topic of this is perimeter security wanted to start with that mr. sammon. to what degree does the tsa coordinates with the faa for its is on spending on airport security? i know in corpus christi we recently got $5 million from the faa to improve security but have

there have been any action with tsa in determining for the multiple dollars are best spent? >> i think since the gao reports you have seen come out of number of things we have been working for several years to address the specific issue you are talking about. first of all we worked with the airport community to come up with recommended design guidelines for airport planning and construction. a lot of the money the airports use for planning and construction comes from the faa. next, we worked with the homeland security institute to develop a best practices from all the airports. >> i am sorry. i've are real short amount of time. you are saying you are working regularly with other agencies to make sure the right hand knows what the left hand is doing? >> the government is working with the airports. they have a tool, specific computer program that they can run through their system. the ideas to work with the airport to come up with the

optical -- optical spending. >> we talk about high-risk airports. what is not a high risk airport where i can get on a commuter jet at any airport in the country and end up in a hub airport and be on the biggest airliner in the world? what would not constitute a? >> i've re-100% in terms of the 700 innovative measures came from airports as small as asheville from the airport such as delta county, minot, big airports in small airports have got into best practices in terms of what are the kinds of things that are appropriate for each airport? >> again let me go to mr. lloyd. mr. lord. you were talking about spending on prisons begging screening equipment. i will speak from experience. we have three airlines american continental with 50 regional