Mixed MessagesMixed Messages

Posted: 06/1999

Mixed Messages
State Anti-Slamming Rules Conflict with FCC Order
By James Veilleux

The anti-slamming rules issued by the Federal Communi-cations Commission (FCC) are by
no means the last word. State rules still apply. At least 38 states have rules against
slamming, and at least 20 states’ rules are significantly different from the FCC’s. Those
differences include allowing third-party verification (TPV) as the only form of
verification, defining the specific script of a TPV call, allowing someone other than the
subscriber to give authorization for a carrier change and requiring TPV providers to be
certified, as well as deviations in the form and content of letters of authorization
(LOAs).

Although the FCC has ruled that state rules cannot conflict with the federal rules,
there will be an ongoing debate about what "conflict" means. For one thing, the
FCC’s latest Report and Order on this topic makes it clear that it will not pre-empt state
rules without a clear case that those rules contradict the FCC’s. The FCC’s order also
states that "… a state may accept additional verification procedures for changes to
intrastate service," suggesting that the states could create other rules. The
commission also ruled that states have been useful in enforcement and encouraged them to
continue helping to enforce the rules. Finally, the FCC also ordered that states could use
other laws, such as general consumer protection laws, to control carrier marketing. In
fact, the FCC last year issued an opinion letter that it would not pre-empt a Minnesota
consumer protection law that was used against a carrier.

Many states will interpret the language of the FCC’s order and its behavior to mean
that they can impose additional verification requirements, rather than simply accept the
FCC verification methods and add other optional rules. Since the FCC will not pre-empt
state action without a strong case, we can expect to see state regulation of this area for
a long time.

Reconciling Different Rules

How will the state and FCC rules work together? Combined with the new
"Truth-in-Billing" rules the FCC adopted, it is easy to imagine some challenging
scenarios for carriers. Consider this: Joe Consumer opens his bill one month and
discovers–thanks to new billing rules–that his carrier has changed. He waits a month
before complaining, then refuses to pay–based on the FCC’s rule absolving customers of
the first 30 days’ billing. After investigating, the carrier finds that it has a recording
of Joe’s wife giving the authorization for the carrier change, but the script of the
authorization does not meet the requirements of Joe’s state. Furthermore, although Joe’s
wife can give authorization under the state’s rules, she is not the subscriber, as is
required by FCC rules. Finally, Joe refuses to pay anything to the new carrier, since
under his state’s rules, he doesn’t have to pay for a service that was not properly
authorized.

How will state rules work together? Since most carriers market in more than one state
and many of them market nationally, it is worth noting that it is difficult to meet every
rule in every state with one national verification method. For example, California allows
only TPV, while Arkansas does not allow TPV unless the carrier gets permission from the
regulatory commission. Although this is the most glaring conflict across states, there are
a number of others.

TPV and LOAs are the closest thing to universal verification mechanisms across the
states’ and FCC rules. While no one form of verification meets the rules in every
jurisdiction, using these two methods and making necessary changes in a few states will
allow a carrier to meet the rules almost everywhere.

State Agencies Surveyed

To see whether the states were likely to continue regulating slamming under the new FCC
rules, VoiceLog LLC, a Charlotte, N.C.,-based provider of TPV services, polled regulatory
staff in all 50 states and asked them for their opinions. Staff people in 26 states were
willing to complete the questionnaire, and the results were very interesting (see
"And the Survey Says …," below). While these are the opinions
of staff, not the official position of the state or even the opinions of the
commissioners, they indicate that many states will continue to enforce rules that add more
restrictions to the use of the verification methods available to carriers.