1. (a) Conditions. An LEC may only require a new deposit or an increase in the amount of a deposit from a customer for the following reasons:

   1. (1) The customer failed to pay a bill before the close of business on the shut-off date within the last twelve (12) months;
   2. (2) The customer gave the LEC two (2) or more checks that were returned unpaid for reasons other than bank error in the last twelve (12) months;

   3. (3) The customer did not pay bills:

      1. (A) By the close of business on the due date two (2) times in a row; or
      2. (B) Any three (3) times in the last twelve (12) months;
   4. (4) During the last twenty-four (24) months, the customer misrepresented his or her identity or other facts relevant to the conditions under which the customer obtained or continued service;
   5. (5) The customer used service without authorization, tampered with the LEC’s equipment, or inflicted damage to the LEC’s equipment during the last two (2) years;

   6. (6)

      1. (A) The customer used more service than the estimate on which the LEC based the deposit.
      2. (B) The LEC may not charge any additional deposit under this subdivision (a)(6) after the first twelve (12) months of service unless the customer:

2. (i) Moves the service to a new location; or

   1. (ii) Expands the business or scope of operation at the original location; and

   2. (7)

      1. (A) In accordance with 11 U.S.C. § 366 of the United States Bankruptcy Code, the LEC may require a customer to furnish adequate assurance of payment in the form of a deposit or other security.
      2. (B) This deposit may be in addition to all other deposits posted with the LEC before the bankruptcy filing.

3. (b) Amounts.

   1. (1) When an LEC charges a new or additional deposit, the total amount on deposit at any time shall not be more than the total of the customer’s two (2) highest bills during the last twelve (12) months.

   2. (2) Exceptions.

      1. (A) Deposit for fraud or tampering. If the reason for requiring a deposit is unauthorized use of service or tampering with the LEC’s equipment, the total amount on deposit with the LEC shall not be more than the estimated bill for six (6) average billing periods plus the cost of potential damage to the LEC’s equipment.

      2. (B) Bankruptcy. See subdivision (a)(7) of this section.

         1. (c) Written notice. An LEC shall explain in writing:
   3. (1) The reason for charging any new or additional deposit;
   4. (2) The amount of the deposit;
   5. (3) When the deposit must be paid; and

   6. (4) The consequences of failing to pay the additional deposit.

      1. (d) Payment procedures. Except for deposits under subdivision (a)(5) of this section, a customer may pay any new or additional deposit in two (2) installments by the due dates of his or her next two (2) bills.
4. (e) Receipts. LECs shall give customers receipts for their deposits upon customer request.

Codification Notes: This section was promulgated as Rule 4.02 of the Telecommunications Providers Rules prior to codification in the Code of Arkansas Rules.