The Federal Communications Commission has punished Birch Communications for deceptive marketing and billing practices to the tune of $6.1 million.
Specifically, the investigation concentrated on allegations that Birch "slammed" customers by switching their preferred carriers without authorization and "crammed" unauthorized charges on its customers' bills. Over the last two years, multiple consumer complaints led to the FCC investigation. Birch will pay a $4.2 million fine to the FCC and refund $1.9 million to consumers who were victims of the deceptive marketing and billing practices.
“Consumers have a right to expect honest talk and fair dealing from any phone company,” said Travis LeBlanc, Enforcement Bureau chief for the FCC, in a release. “It is plainly unacceptable for any carrier to misrepresent its identity or purpose in order to mislead consumers into switching their preferred provider and to add unauthorized charges to consumer bills. Today’s settlement ensures that all of Birch’s customers will enjoy greater protections and that those who were unlawfully charged will get their money back.”
In addition to the monetary penalty, the FCC is requiring Birch to embark on a strict compliance plan. The company must record all of its sales calls, verify any changes to a customer's preferred carrier, provide enhanced customer notice about early termination fees, and promptly investigate consumer complaints about unauthorized charges and carrier changes. Birch will also have to name a senior corporate manager as a compliance officer and file compliance reports with the FCC for five years.
"Slamming" and "cramming" were a big issue back in 2011, when the FCC charged four phone companies a combined $11.7 million in fines for the practices: Main Street Telephone ($4.2 million); VoiceNet Telephone, LLC ($3 million); Cheap2Dial Telephone, LLC ($3 million); and Norristown Telephone, LLC ($1.5 million). A month later, the Senate Commerce Committee released a report estimating that "cramming" customers' bills resulted in about $2 billion of unauthorized charges per year.
The issue prompted the FCC to introduce a Notice of Proposed Rule Making (NPRM) to combat the practice. The NPRM requires service providers to notify their customers at the point of sale and on their websites that they have the option to block third-party charges from their telephone bills, if the carrier offers that option. In addition, third-party charges are to be separated on bills from the telephone company's charges.