******************************************************** NOTICE ******************************************************** This document was converted from WordPerfect to ASCII Text format. Content from the original version of the document such as headers, footers, footnotes, endnotes, graphics, and page numbers will not show up in this text version. All text attributes such as bold, italic, underlining, etc. from the original document will not show up in this text version. Features of the original document layout such as columns, tables, line and letter spacing, pagination, and margins will not be preserved in the text version. If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D. C. 20554 In the Matter of ) )File No. ENF-97-04 Long Distance Services, Inc. ) )NAL/Acct. No. 716EF0003 ) Apparent Liability for Forfeiture) NOTICE OF APPARENT LIABILITY FOR FORFEITURE Adopted: December 12, 1996; Released: December 17, 1996 By the Chief, Common Carrier Bureau: I. INTRODUCTION 1. By this Notice of Apparent Liability for Forfeiture ("NAL"), we initiate enforcement action against Long Distance Services, Inc. ("LDSI") and its affiliated companies. For the reasons discussed below, we find that LDSI apparently willfully or repeatedly violated Commission rules and orders by changing the primary interexchange carrier ("PIC") designated by Dr. Stan Altman ("Altman") of New York, New York and Gerrold DeBoe ("DeBoe") of Pompano Beach, Florida without Altman's or DeBoe's authorization. Based upon our review of the facts and circumstances surrounding the violations, we find that LDSI is apparently liable for a forfeiture in the amount of eighty thousand dollars ($80,000). II. THE COMMISSION'S PIC CHANGE RULES AND ORDERS 2.In its Allocation Order and subsequent Reconsideration Order and Waiver Order, the Commission set forth rules and procedures for implementing equal access and customer presubscription to an interexchange carrier ("IXC"). The Commission's original allocation plan required IXCs to have on file a letter of agency ("LOA") signed by the customer before submitting PIC change orders to the local exchange carrier ("LEC") on behalf of the customer. After considering claims by certain IXCs that this requirement would stifle competition because consumers would not be inclined to execute the LOAs even though they agreed to change their PIC, the Commission modified the requirement to allow IXCs to initiate PIC changes if they had "instituted steps to obtain signed LOAs." When it continued to receive a large volume of complaints concerning the unauthorized PIC changes, the Commission revised its rules again in 1992. Specifically, while the Commission recognized the benefits of permitting a telephone-based industry to rely on telemarketing to solicit new business, it required IXCs to institute one of the following four confirmation procedures before submitting PIC change orders generated by telemarketing: (1) obtain the consumer's written authorization; (2) obtain the consumer's electronic authorization by use of an 800 number; (3) have the consumer's oral authorization verified by an independent third party; or (4) send an information package, including a prepaid, return postcard, within three days of the consumer's request for a PIC change, and wait 14 days before submitting the consumer's order to the LEC, so that the consumer has sufficient time to return the postcard denying, cancelling or confirming the change order. Hence, the Commission's rules and orders require that IXCs either obtain a signed LOA or, in the case of telemarketing solicitations, complete one of the four telemarketing verification procedures before submitting PIC change requests to LECs on behalf of consumers. 3.Because of its continued concern over unauthorized PIC changes, the Commission recently prescribed the general form and content of the LOA used to authorize a change in a customer's primary long distance carrier. The Commission's current rules prohibit the potentially deceptive or confusing practice of combining the LOA with promotional materials in the same document. The rules also prescribe the minimum information required to be included in the LOA and require that the LOA be written in clear and unambiguous language. The rules prohibit all "negative option" LOAs and require that LOAs and any accompanying promotional materials contain complete translations if they employ more than one language. III. THE ALTMAN AND DEBOE COMPLAINTS A. The Altman Complaint. 4.On August 30, 1996, the Commission received correspondence from Altman alleging that LDSI had converted his prescribed long distance service provider from AT&T Corporation ("AT&T") to LDSI without his authorization. Altman says he first realized his long distance service had been switched when he was making a phone call. He checked his most recent billing statement and discovered that US Billing ("USBI"), a billing agent for LDSI, was charging for his long distance calls instead of AT&T, his previously selected carrier. Altman requested a copy of USBI's authorization to switch his service and received an LOA, allegedly signed by his wife, Claire Haaga Altman, and containing the Altman's home telephone number. The LOA contained incorrect information regarding his wife's age, name, work number, and their home address. Ms. Altman provided a copy of her driver's license as proof of the authenticity of her signature. According to Altman, the telephone account in question is in Dr. Altman's name only. Altman states, however, that the current New York Telephone Directory lists his wife's maiden name and their former address, even though they have moved twice since the directory listing was published. 5.On September 17, 1996 the Common Carrier Bureau's Consumer Protection Branch directed LDSI to provide specific information regarding the conversion of Altman's telephone service. LDSI has neither responded to the staff's request nor sought an extension of time in which to submit the requested information. B. The DeBoe Complaint. 6.On June 11, 1996 the Commission received a written complaint from DeBoe alleging that LDSI had converted his prescribed long distance service provider from LDDS WorldCom ("WorldCom") to LDSI without his authorization. DeBoe states he contacted his local carrier, BellSouth, when he discovered he was being charged higher long distance rates. When BellSouth informed DeBoe that his long distance service had been changed from WorldCom to LDSI, DeBoe requested proof that he authorized the change. After contacting USBI, he was sent a copy of an LOA, which Deboe claims contains a forged signature. DeBoe provided a copy of his driver's license as proof of the authenticity of his signature. 7. The Consumer Protection Branch directed LDSI to provide specific information regarding the conversion of DeBoe's telephone service on June 27, 1996. LDSI has neither responded to the staff's request nor sought an extension of time in which to submit the requested information. IV. DISCUSSION 8.We have evaluated the information submitted in connection with the Altman and DeBoe informal complaints and conclude that LDSI is apparently liable for forfeiture for willful or repeated violation of the Commission's rules and PIC change requirements. We find LDSI's apparent actions particularly egregious. It appears that on or about July 12, 1996 and March 28, 1996, LDSI submitted PIC change requests to NYNEX-New York (NYNEX) and BellSouth based on apparently forged LOAs, resulting in the conversion of Altman's and DeBoe's telephone service from AT&T and WorldCom, respectively, to LDSI. The statements and information provided by Altman and DeBoe indicate that the LOAs were not executed by the complainants and that LDSI lacked the requisite authorization to request a PIC change to Altman's or DeBoe's long distance service. With regard to Altman's complaint, there is no similarity between the signature of Claire Haaga Altman on her driver's license and her purported signature on the LOA form that LDSI used as the basis for the PIC change submitted to NYNEX. Furthermore, Dr. Stan Altman, not his wife, is the subscriber to the phone service at issue. With regard to DeBoe's complaint, there is no similarity between the signature on either DeBoe's complaint or his driver's license and his purported signature on the LOA form that LDSI used as the basis for the PIC change submitted to BellSouth. Under these circumstances, we conclude that LDSI's apparent actions were in willful or repeated violation of the Commission's PIC change rules and orders and that a forfeiture penalty is appropriate. 9.As a general matter, the unauthorized conversion of a customer's presubscribed long distance carrier continues to be a wide-spread problem in the industry. We are particularly troubled by what appears to be a common practice by some IXCs of relying on unverified LOAs, which turn out to be falsified or forged, to effect changes in consumers' long distance service. The pervasiveness of the problem suggests that our current administration of the law has not produced sufficient deterrence to non-compliance and the carriers have little incentive to curtail practices that lead to consumer complaints. Furthermore, as a practical matter, the carriers' responses to alleged unauthorized conversion complaints rarely provide a detailed explanation or justification of the carrier's actions. Therefore, to draw industry's attention to the seriousness of the problem and to provide incentives to comply with the Commission's rules and orders, we intend to scrutinize consumer complaints and to take prompt enforcement action, including the imposition of substantial monetary fines, when the facts indicate that a carrier has failed to take the necessary steps to ensure that LOAs are valid and duly authorized. If carriers intend to rely on a LOA to request a PIC change, they will be responsible for ensuring its validity and its compliance with our rules designating proper LOA form and content. 10.Section 503(b)(2)(B) of the Communications Act authorizes the Commission to assess a forfeiture of up to one hundred thousand dollars ($100,000) for each violation, or each day of a continuing violation, up to a statutory maximum of one million dollars ($1,000,000) for a single act or failure to act. In exercising such authority, the Commission is required to take into account "the nature, circumstances, extent, and gravity of the violation and, with respect to the violator, the degree of culpability, any history of prior offenses, ability to pay, and such other matters as justice may require." For purposes of determining an appropriate forfeiture penalty in this case, we regard the conversion of Altman's and DeBoe's telephone lines as two violations. After weighing the circumstances surrounding the violation, we find that LDSI is apparently liable for a forfeiture of forty thousand dollars ($40,000) for the unauthorized conversion of the Altman line and forty thousand dollars ($40,000) for the conversation of the DeBoe line, resulting in a total forfeiture of eighty thousand dollars ($80,000). LDSI will have the opportunity to submit evidence and arguments in response to this NAL to show that no forfeiture should be imposed or that some lesser amount should be assessed. We will give full consideration to any financial information provided by LDSI before assessing a final forfeiture amount. V. CONCLUSIONS AND ORDERING CLAUSES 11.We have carefully reviewed the information submitted in connection with Dr. Stan Altman's and Mr. Gerrold DeBoe's informal complaints and conclude that on or about July 12, 1996, and March 28, 1996, LDSI apparently converted or caused a local exchange carrier to convert Altman's and DeBoe's telephone lines without Altman's and DeBoe's authorization through the use of apparently forged LOAs. We further conclude that LDSI thereby apparently willfully or repeatedly violated Commission rules governing primary interexchange carrier conversions, and that its conduct warrants a forfeiture in the amount of eighty thousand dollars ($80,000). 12.Accordingly, IT IS ORDERED, pursuant to Section 503(b) of Communications Act of 1934, as amended, 47 U.S.C.  503(b), Section 1.80 of the Commission's rules, 47 C.F.R.  1.80, and the authority delegated in Section 0.291 of the Commission's rules, 47 C.F.R.  0.291, that Long Distance Services, Inc. and its affiliated companies ARE HEREBY NOTIFIED of an Apparent Liability for Forfeiture in the amount of eighty thousand dollars ($80,000) for willful or repeated violation of the Commission's PIC change rules and orders. 13.IT IS FURTHER ORDERED, pursuant to Section 1.80 of the Commission's rules, 47 C.F.R.  1.80, that within thirty days of the release of this Notice, Long Distance Services, Inc. or its affiliated companies SHALL PAY the full amount of the proposed forfeiture OR SHALL FILE a response showing why the proposed forfeiture should not be imposed or should be reduced. 14.IT IS FURTHER ORDERED that a copy of this Notice of Apparent Liability for Forfeiture SHALL BE SENT by certified mail to Mr. Daniel Fletcher, President of Long Distance Services, Inc., 2117 L Street, N.W., No. 293, Washington, D.C. 20037 and P. O. Box 1597, Rowlett, Texas 75030. FEDERAL COMMUNICATIONS COMMISSION Regina M. Keeney Chief, Common Carrier Bureau