(a) No telephone corporation shall require any applicant or existing residential customer to post a security deposit as a condition of receiving basic local exchange service unless the existing residential customer or applicant:

1. (1) is a seasonal customer or short-term customer;
2. (2) is an existing residential customer who has accumulated two consecutive months of arrears without making reasonable payment of such charges, defined as one half of the total arrears, prior to the due date of the second bill, provided that the telephone corporation requests such deposit within two months of such failure to pay. A local exchange carrier intending to require a deposit of an existing residential customer shall provide a customer written notice, including the amount of the deposit, at least 10 days before it may assess a deposit, and state that the failure to make timely payment of the arrears will permit the utility to require a deposit from such customer;
3. (3) has had basic local exchange service terminated for nonpayment during the preceding six months;
4. (4) has reportable charges with any other telephone corporation;
5. (5) does not give a telephone corporation with which he or she is applying for service permission to determine the existence of reportable charges or if the customer has been terminated for nonpayment during the preceding six months on a previous or current account with other local telephone corporations subject to these regulations; or

6. (6) fails to provide reasonable proof of identity pursuant to section 609.3(a)(6) of this Part.

   (b) Payment of deposit.

   If a telephone corporation requires a deposit from an existing residential customer or an applicant for telephone service, it shall permit such customer to pay the deposit in installments over a period not to exceed six months.

   (c) Exceptions to deposit authorization.

7. (1) No telephone corporation shall require any person it knows to be a recipient of public assistance, supplemental security income, or additional State payments to post a security deposit.

8. (2) No telephone corporation shall demand or hold a deposit from any applicant or existing residential customer it knows is 62 years of age or older unless such customer has had service terminated for nonpayment of bills within the preceding six months. Telephone corporations shall permit an applicant or existing residential customer 62 years of age or older to pay the deposit in installments over a period not to exceed 12 months.

   (d) Deposit amounts.

   In any case where customer deposits are authorized by this section, the deposit amount shall not exceed two times the average monthly bill for basic local exchange service for a calendar year in order to secure payment for basic local exchange services actually rendered or for the rental of fixtures, instruments and facilities actually supplied.

   (e) Interest on deposits.

   Every telephone corporation shall allow every customer from whom a deposit is required interest on the amount deposited at a rate prescribed annually by the commission.

   (f) Application of deposit to unpaid bill.

   Each telephone corporation holding customer deposits shall render to each depositor, when and as his or her deposit is applied to an unpaid bill or bills, a statement showing:

9. (1) the amount of the deposit, together with the interest accrued thereon and the period covered thereby; and

10. (2) the balance of the bill or bills remaining unpaid or the balance of the deposit and interest thereon remaining to the credit of the depositor.

    (g) Refunds.

11. (1) Each telephone corporation shall review the accounts of all existing residential customers who have made deposits at least annually. Each depositor, upon becoming entitled to a refund by reason of nondelinquency for one year or upon ceasing to be a customer, shall receive his or her deposit and all interest thereon which has not been refunded or credited against bills for service.
12. (2) The telephone corporation shall initiate such refund action and may request the payment of all bills for which such deposit is security.
13. (3) Any refund may be credited to the customer's account or, at the election of the depositor, the full refund shall be made to the depositor.

14. (4) For purposes of establishing a refund date when deposits are paid on an installment plan, the date will be the day of receipt of the first installment.

    (h) Circular containing terms of deposit.

    Each and every telephone corporation holding customer deposits shall keep on hand for distribution to its customers a summary of the pertinent features of these requirements and shall inform customers from whom deposits are requested of its availability.

    (i) Records.

    Each telephone corporation holding customer deposits shall keep adequate records with respect to each deposit.