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January 1, 2000
Third-Party Verifiers Help Carriers Fend Off Fraud
By Liz Montalbano
With all the haggling over slamming and cramming that ensued in
1999–including the FCC’s adoption of the toughest anti-slamming rules to date
in April with its Truth in Billing Requirements–the fact remains: Carriers and
resellers still are charging customers for services they don’t want and
switching customers’ service providers without their knowledge or consent.
In fact, last fall the FCC (www.FCC.gov)
fined Qwest Communications International Inc. (www.qwest.net)
$2.1 million for 30 violations involving forged signatures and other fraudulent
activity by Qwest customer service representatives (CSRs), resulting in
customers being switched to the carrier without their consent or knowledge.
Later that week, according to ABC News, the Denver-based carrier fired nine CSRs
for their involvement in unscrupulous practices. Unfortunately, that didn’t
completely solve the carrier’s troubles. Only a month later, it again found
itself in hot water when the state of Connecticut filed a lawsuit against the
company for alleged slamming, seeking "hundreds of thousands" of
dollars, according to the suit, which still is pending.
Such unscrupulous activity indicates one of two things: either service
providers still aren’t taking advantage of the host of third-party verification
(TPV) services available to them, or the TPV solution they are using just isn’t
secure enough to ensure fair business practices.
Even though it’s not a panacea for keeping consumers from getting crammed or
slammed (nor for keeping carriers out of litigation over such offenses), TPV
remains the best option to accomplish these goals. While the FCC has mandated
verification for switching service providers, it does not clearly spell out ways
to ensure that such verifications are legitimate or require verifications for
new sales of every type of service.
So far, it has been up to the states to reinforce the law within their own
jurisdiction to prevent slamming and cramming. And according to Larry Leikin,
vice president, sales for TPV provider VoiceLog LLC (www.voicelog.com),
there is still room for fraudulent practice at the state level.
To date, he says, only Texas has mandated that all services placed on a phone
bill must be third-party verified, and California ruled that all letters of
agency (LOAs) must be verified by a third party before a switch or charge is
added to a customer’s bill. This means the industry as a whole is still a long
way from eliminating such complaints altogether, he says.
"Slamming is still a very big problem, as is cramming," Leikin
says. "One of the biggest problems is that orders can still be submitted
everywhere except California without any type of verification whatsoever. So if
I want to perpetrate fraud, I can sit here with a stack of LOAs, fill them out
and submit them to the carrier and they’re going to get through."
Nelson Gross, general manager for Millennium TPV Technologies (www.millenniumtpv.com)
agrees, adding that some carriers may feel the need only to do the minimum of
what regulations require–the actual verification of the order itself–rather
than actually ensure the verification is legitimate.
"There’s plenty of damage being done," Gross says. "Our
feeling is that verification companies–I don’t fault them for what they do, but
they’re looking at, ‘Hey, what do we have to do to conform to the regs? What
does the service provider need to do to conform to the FCC or PSC (public
service commission) or even LEC (local exchange carrier) requirements?’"
Gross says that instead, verification companies should take the approach he
believes Millennium promotes. "You can satisfy the regs, but if you want to
make money as a service provider, your customer has to be willing to pay for the
service, which means they have to know they bought it and it has to be properly
represented," he says. "You can’t make money if you allow these games
TPV as it stands today basically consists of three parts: the actual
verification itself, whether live or automated, which is usually recorded; a
validation of that recorded verification in which another person listens to
ensure legitimacy; and reporting, usually daily and weekly, which gives the
service provider detailed information about its agents and keeps the service
provider abreast of any fraudulent activity.
Callback services, in which a third-party verifier makes an outbound call to
the customer after a verification is made, can be added to these elements to
further ensure sales are legitimate.
According to Leikin, VoiceLog uses an automated front-end combined with live
operator validation of those verifications and daily reporting to protect its
clients from slamming and cramming violations. He says about 20 percent of
VoiceLog’s client base also uses a callback service, which happens within 10
seconds of the recorded verification.
"Because of the immediacy of the callback, clients can expect to confirm
over 95 percent of their callback orders," Leikin says.
Millennium’s solution uses an automated front end as well, and Gross says the
company recently developed a solution called Verbatim Recall for its automated
system. This means not only are the customer’s answers to the automated system
recorded, as is usually the case with verifications, but the system also records
the automated questions it asks the customer. This means if a service provider’s
CSR tries to distract the customer from the recorded questions by talking over
them, the system will have that violation on tape.
"From the time the representative … [starts] the platform, it records
everything that happens 100 percent from beginning to end," Gross says.
"So if anyone’s talking while the platform’s talking, it’s recorded.
Millennium then has agents validating all the verified calls, and offers
detailed reporting to its clients. The company also is, according to Gross,
"a very big proponent of the callback," urging that customers not only
verify, record and then validate calls, but also utilize a callback to guarantee
the service orders are legitimate.
Another TPV provider, PriceInteractive (www.priceinteractive.com),
goes a step further than the typical interactive voice response (IVR) automated
system–it uses speech recognition to enhance its automated front-end
verification, which also is recorded. PriceInteractive agents then listen to
those speech recognition-verified calls and, if there is a discrepancy in what
the system recorded and what the live agent hears, the call is saved and is
available for the carrier to review in case fraudulent activity is reported.
Two other verification companies–Advanced Data-Comm Inc. (www.advanceddata.com),
formerly Verifications Plus, and Teltrust Inc. (www.teltrust.com),
mainly provide live operator verifications, although both also can provide
automated verifications if a client so chooses.
"We have offered the option of either live or IVR (interactive voice
response) to our clients and the clients that we work with prefer the live
option," says Tim Duggan, senior account executive for Advanced Data-Comm.
When a customer uses Advanced Data-Comm’s automated system, he adds, it also
gets the backup of live validation of the recorded verifications, of which daily
reports are made.
Eric Stein, vice president of business development for Teltrust, also says
"most of my customers want live verifications," although the automated
option is available to them as well. Both Teltrust and Advanced Data-Comm also
offer their clients live-agent validation of verifications.
Live vs. Automated Verification
While an individual TPV provider will insist its solution for verification is
secure, there’s much debate over which method actually is best to ensure
slamming and cramming violations do not occur.
As mentioned above, automated and live-operator TPV both are options for
carriers and resellers looking for solutions. Deciding which is best of course
is up to the individual service provider, but proponents on both sides do offer
some food for thought.
Stein of Teltrust is a cheerleader for live-operator verifications, believing
it’s the most secure way to verify service orders. If you don’t believe him, ask
his customers, he says.
"Clients using our automated system discovered they weren’t getting as
high a verification rate as they were with live verifications," Stein says.
He says that 50 percent or 60 percent of the time, customers would "opt
out" of the automated system before the verification was complete. With
live verifications, he adds, his clients find that customers complete the
verifications about 80 percent to 90 percent of the time.
Advanced Data-Comm’s Duggan, too, is a proponent of live verification vs.
automated systems. "There’s less chance for fraudulent activity because
hopefully a live operator can distinguish between the sales rep and the
customer’s voice," Duggan says. "With the IVR system, you have no idea
who’s speaking, no idea who’s punching in the numbers."
Duggan also adds that from a customer service perspective, his clients would
rather that a new customer switching to their service experience live
interaction with the company rather than simply being passed off to an automated
system once they’ve made the commitment to the service.
"They’ve made some investment in acquiring an account and they just feel
it’s a better level of customer service [and that] the very first contact with
the company should be with a live person," Duggan says.
According to Stein, cost, too, "seems to be a major factor." Live
verifications tend to be more expensive than automated ones–about $2 per call
vs. $1.30 or so for automated verifications–which often is the incentive for
service providers to go with an automated system rather than incur the expense
of live operators.
Millennium’s Gross says that his company’s Verbatim Recall solution has
solved the cost problem, combining the security of live operators–since even
the automated system’s questions are being recorded and later verified in case a
CSR tries to interfere–with the lowered cost of an automated system.
"It (Verbatim Recall]) makes our automated verification better than live
for the same reason people think live’s better than automated," he says.
"It’s more expensive than standard verification–about $1.50 to $1.75 per
call–but it makes it more cost-effective than a live verification."
Dan Price of PriceInteractive also feels his company’s combination of a
speech recognition-enhanced IVR system combined with live validation of the
recorded verifications are more efficient and secure than live verifications.
With live agents, according to Price, there’s room for human error and the
chance that the agent "might get into a chit-chat with the customer,"
putting strains on cost efficiency. Other good news for service providers
interested in the PriceInteractive solution, according to Ken Rokoff, vice
president of sales and marketing for the comapny: It costs about 50 cents per
call, one of the least-expensive solutions on the market.
But while PriceInteractive officials ensure the speech recognition aspect of
its product is secure and provide live-agent backup to validate, VoiceLog’s
Leikin himself isn’t convinced enough to use the technology in general.
"The problem with speech recognition–it’s more than just the ‘yes’s and
the ‘no’s you have to confirm," he says. "Somebody has to be on the
line that has a valid name. If you’re only using speech recognition and someone
gives their name as ‘Mickey Mouse,’ speech recognition is not going to detect
that that’s an invalid name."
To Call (Back) or Not To Call (Back)
According to Millennium’s Gross, any doubts about the security of any TPV
system a service provider chooses can almost be dispelled by one thing: the call
"The fact is, without a call back, there’s going to be fraud, your
customers aren’t going to know what they’re getting and you’re going to have
recourse, inquiries, problems and that’s not a way to build a business,"
While most TPV providers often offer call-back services–for an extra fee–on
automated verifications, live-operator verified calls don’t always get that
extra attention. In fact, Advanced Data-Comm’s Duggan concedes that, even though
Advanced Data-Comm got its start as a callback company in 1992, "with a
live operator, you really don’t need callback." He does add, however, that
currently for "a couple of clients … we do a live-operator inbound
[verification] and then also do a live outbound call-back."
Teltrust’s Stein also thinks call-back is a good idea, but he again mentions
the cost factor that inhibits some service providers from using the service.
"Call-back services add more to the cost," he says, "[and] some
people are cheap and don’t care about slamming."
He adds that some of what he calls Teltrust’s "risqui" clients not
only will conference the TPV operator in for verifications, but also will have
an operator immediately call the customer back after the verification to ensure
the legitimacy of the service order.
Liz Montalbano is news editor for PHONE+ magazine.
Read more about:Agents
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