FCC Approves Anti-Slamming Rules Amid Controversy

The Federal Communications Commission (FCC) has adopted new rules aimed at curbing the practice of slamming, which involves unauthorized changes to a customer's preferred telecommunications carrier. The move has been met with both praise and criticism from the industry, with some carriers expressing concern that the rules could create more problems than they solve.

The most contentious aspect of the rules is a provision that absolves customers who claim to have been slammed from paying for 30 days' worth of charges levied by the alleged slammer. However, Commissioner Harold Furchtgott-Roth dissented from the decision, arguing that this provision could create the "wrong incentives" and require legitimate carriers to bear the costs of slamming. Commissioner Michael K. Powell also expressed skepticism about the provision, stating that it contradicts section 258(b) of the Telecommunications Act of 1996.

The FCC has received over 20,000 slamming-related complaints in 1998 alone, and the new rules aim to provide a mechanism for addressing these issues. Under the revised rules, carriers receiving slamming reports must inform customers that they are not required to pay any charges incurred for 30 days after the unauthorized switch. Unauthorized carriers are also required to pay other expenses, including reasonable billing and collection costs, incurred by the authorized carrier.

In addition to the anti-slamming rules, the FCC has also modified the acceptable methods by which a carrier can verify subscribers' authorization of carrier changes. Carriers can no longer use "welcome packages" that require customers to return a postcard to cancel a carrier change. Instead, three acceptable methods of verification have been established: a customer signature on a letter of agency, an electronic authorization, and independent third-party verification.

The FCC has also proposed a further notice of proposed rulemaking to seek comments on further methods to combat slamming, including a proposal to require unauthorized carriers to refund any charges collected and pay the authorized carrier the amount collected.

Key Takeaways:

• The FCC has approved new anti-slamming rules aimed at curbing the practice of slamming.
• The most contentious aspect of the rules is a provision that absolves customers who claim to have been slammed from paying for 30 days' worth of charges levied by the alleged slammer.
• Commissioner Harold Furchtgott-Roth and Commissioner Michael K. Powell dissented from the decision, arguing that this provision could create more problems than it solves.
• The FCC has received over 20,000 slamming-related complaints in 1998 alone.
• The new rules establish three acceptable methods of verification: a customer signature on a letter of agency, an electronic authorization, and independent third-party verification.
• Unauthorized carriers are required to pay other expenses, including reasonable billing and collection costs, incurred by the authorized carrier.
• The FCC has proposed a further notice of proposed rulemaking to seek comments on further methods to combat slamming.

Statistics:

• Over 20,000 slamming-related complaints have been received by the FCC in 1998 alone.
• The FCC has proposed a $2 million forfeiture against Long Distance Direct, Inc. and a $2.4 million forfeiture against Business Discount Plan, Inc. for slamming allegations.
• The largest voluntary payment in any FCC slamming case to date is $1.2 million, which was made by Minimum Rate Pricing, Inc.
• The FCC's Common Carrier Bureau proposed an $80,000 forfeiture against MRP last year.

Sources:

• [TR News, December 16, 1998]
• [Federal Communications Commission, Order, CC Docket No. 94-129]
• [House Commerce Committee, Press Release, December 1998]
• [U.S. Telephone Association, Press Release, December 1998]
• [Bell Atlantic Corp., Press Release, December 1998]
• [AT&T Corp., Press Release, December 1998]
• [MCI WorldCom, Inc., Press Release, December 1998]