Regulatory News – Commission Nails Two IXCs with Slamming Fines

Posted:  09/2000

Commission Nails Two IXCs with Slamming Fines
By Kim Sunderland

The FCC has adopted more anti-slamming rules designed to improve how consumers choose their preferred telephone carrier, and make it harder for carriers to slam them.

At the same time, the commission flexed its enforcement muscles by levying hefty fines on two IXCs charged with slamming, or the unauthorized switching of a consumer’s long-distance provider.

With its order, the FCC
(www.fcc.gov) says it has resolved the majority of the remaining open slamming issues. Specifically, preferred carrier changes are permitted and now can be conducted electronically through the use of Internet letters of agency
(LOAs).

Internet LOAs must comply with all current FCC requirements, and consumers must have the option of using alternative authorization and verification methods, such as written LOAs or independent third-party verification, the FCC says in its order.

The commission’s order also does the following:

• Addresses the problem of “soft slamming” by allowing switchless resellers to use carrier identification codes
  (CICs), which are numeric codes that enable local phone companies to identify a consumer’s preferred long-distance carrier.
• Refines its independent third-party verification process.
• Adopts a definition of the term “subscriber” that will protect customers of record by giving them control over who is authorized to change their carrier of choice.
• Requires each carrier to submit a bi-annual report on the number of slamming complaints it receives.
• Adopts streamlined carrier registration rules that prevent slammers from escaping detection simply by changing their names.

The order also upholds FCC rules governing the submission of preferred carrier freeze orders; reaffirms its decision not to preempt state regulations governing verification procedures for preferred carrier change requests; and adopts a 60-day limit on the amount of time an LOA confirming a carrier change request should be considered valid.

Soon after issuing its order, the commission agreed to a settlement with Qwest Communications International Inc.
(www.qwest.com), a broadband Internet company, regarding slamming complaints against the carrier.

The deal calls for Qwest to make a voluntary payment of $1.5 million to the U.S. Treasury in exchange for the FCC dropping further investigations into the slamming complaints. Qwest executives say the complaints were made more than a year ago, before the company started its anti-slamming campaign.

“This agreement with the FCC allows us to put this unfortunate situation behind us and look forward to continuing to serve our customers nationwide,” said Mark Pitchford, senior vice president of consumer markets for Qwest. “We have made it clear to the FCC that we have zero tolerance for slamming and are continually evaluating and enhancing our anti-slamming efforts.

“The FCC now understands that we take this issue very seriously and have successfully decreased the incidents of slamming nationwide,” Pitchford says.

The settlement imposes financial penalties for violations and makes sure that agents who commit sales fraud will be terminated. Qwest also will modify its commission policies to remove any incentive to submit improper orders and will require its independent sales agents to return at least 150 percent of the revenues they receive from any slammed account.

Also, for three years, Qwest will use an independent third party to verify all consumer sales resulting from face-to-face marketing to ensure accuracy.

The FCC also has ordered Long Beach, Calif.-based Business Discount Plan Inc. (BDP), formerly TransNational Telephone Inc., to pay $2.4 million for slamming and deceptive telemarketing practices. The company was named in numerous slamming complaints filed at the FCC during a 10-month period, according to an FCC staffer.

The complaints have been filed by residential and small businesses consumers in Arizona, Colorado, Florida, Illinois, Indiana, Maine, Massachusetts, Nevada, New Hampshire, Ohio, Pennsylvania, Texas and Virginia.

Consumers allege BDP misrepresented itself and said it was affiliated with their existing local or long-distance carrier, according to the FCC. BDP has not denied that it named itself as the preferred carrier for 30 consumers, but said it should not be found liable under commission rules.

In addition to the fine, the FCC said that further violations could lead it to revoke BDP’s license to provide long-distance service.