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Clear Rate Slam Order

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Released: June 27, 2014
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Federal Communications Commission

DA 14-908

Before the

Federal Communications Commission

Washington, D.C. 20554

In the Matter of

)

)

Clear Rate Communications

)

IC No. 13-S3685297

)

Complaint Regarding

)

Unauthorized Change of

)

Subscriber’s Telecommunications Carrier

)

ORDER

Adopted: June 26, 2014

Released: June 27, 2014

By the Deputy Chief, Consumer Policy Division, Consumer & Governmental Affairs Bureau:

1.

In this Order, we consider the complaint1 alleging that Clear Rate

Communications (Clear Rate) changed Complainant’s telecommunications service provider

without obtaining authorization and verification from Complainant in violation of the

Commission’s rules.2

We conclude that Clear Rate’s actions violated the Commission’s carrier

change rules and we grant Complainant’s complaint.

2.

In December 1998, the Commission released the Section 258 Order in which it

adopted rules to implement Section 258 of the Communications Act of 1934 (Act), as amended

by the Telecommunications Act of 1996 (1996 Act).3 Section 258 prohibits the practice of

“slamming,” the submission or execution of an unauthorized change in a subscriber’s selection

1

Informal Complaint No. IC 13-S3685297, filed June 24, 2013.

2

See 47 C.F.R. §§ 64.1100 – 64.1190.

3

47 U.S.C. § 258(a); Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56 (1996);

Implementation of the Subscriber Carrier Selection Changes Provisions of the Telecommunications Act of 1996;

Policies and Rules Concerning Unauthorized Changes of Consumers’ Long Distance Carriers, CC Docket No. 94-

129, Second Report and Order and Further Notice of Proposed Rule Making, 14 FCC Rcd 1508 (1998) (Section 258

Order), stayed in part, MCI WorldCom v. FCC, No. 99-1125 (D.C. Cir. May 18, 1999); First Order on

Reconsideration, 15 FCC Rcd 8158 (2000); stay lifted, MCI WorldCom v. FCC, No. 99-1125 (D.C. Cir. June 27,

2000); Third Report and Order and Second Order on Reconsideration, 15 FCC Rcd 15996 (2000), Errata, DA No.

00-2163 (rel. Sept. 25, 2000), Erratum, DA No. 00-2192 (rel. Oct. 4, 2000), Order, FCC 01-67 (rel. Feb. 22, 2001);

Third Order on Reconsideration and Second Further Notice of Proposed Rule Making, 18 FCC Rcd 5099 (2003);

Order, 18 FCC Rcd 10997 (2003); Fourth Report and Order, 23 FCC Rcd 493 (2008). Prior to the adoption of

Section 258, the Commission had taken various steps to address the slamming problem. See, e.g., Policies and

Rules Concerning Unauthorized Changes of Consumers' Long Distance Carriers, CC Docket No. 94-129, Report

and Order, 10 FCC Rcd 9560 (1995), stayed in part, 11 FCC Rcd 856 (1995); Policies and Rules Concerning

Changing Long Distance Carriers, CC Docket No. 91-64, 7 FCC Rcd 1038 (1992), reconsideration denied, 8 FCC

Rcd 3215 (1993); Investigation of Access and Divestiture Related Tariffs, CC Docket No. 83-1145, Phase I, 101

F.C.C.2d 911, 101 F.C.C.2d 935, reconsideration denied, 102 F.C.C.2d 503 (1985).

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Federal Communications Commission

DA 14-908

of a provider of telephone exchange service or telephone toll service.4

In the Section 258 Order,

the Commission adopted aggressive new rules designed to take the profit out of slamming,

broadened the scope of the slamming rules to encompass all carriers, and modified its existing

requirements for the authorization and verification of preferred carrier changes. The rules

require, among other things, that a carrier receive individual subscriber consent before a carrier

change may occur.5

Pursuant to Section 258, carriers are absolutely barred from changing a

customer's preferred local or long distance carrier without first complying with one of the

Commission's verification procedures.6

Specifically, a carrier must: (1) obtain the subscriber's

written or electronically signed authorization in a format that meets the requirements of

Section 64.1130; (2) obtain confirmation from the subscriber via a toll-free number provided

exclusively for the purpose of confirming orders electronically; or (3) utilize an independent

third party to verify the subscriber's order.7

3.

The Commission also has adopted liability rules. These rules require the carrier

to absolve the subscriber where the subscriber has not paid his or her bill. In that context, if the

subscriber has not already paid charges to the unauthorized carrier, the subscriber is absolved of

liability for charges imposed by the unauthorized carrier for service provided during the first 30

days after the unauthorized change.8

Where the subscriber has paid charges to the unauthorized

carrier, the Commission’s rules require that the unauthorized carrier pay 150% of those charges

to the authorized carrier, and the authorized carrier shall refund or credit to the subscriber 50% of

all charges paid by the subscriber to the unauthorized carrier.9 Carriers should note that our

actions in this order do not preclude the Commission from taking additional action, if warranted,

pursuant to Section 503 of the Act.10

4.

We received Complainant’s complaint on June 24, 2013, alleging that

Complainant’s telecommunications service provider had been changed to Clear Rate without

Complainant’s authorization. Pursuant to Sections 1.719 and 64.1150 of the Commission’s

rules11 we notified Clear Rate of the complaint and Clear Rate responded on July 24, 2013.12

4

47 U.S.C. § 258(a).

5

See 47 C.F.R. § 64.1120.

6

47 U.S.C. § 258(a).

7

See 47 C.F.R. § 64.1120(c). Section 64.1130 details the requirements for letter of agency form

and content for written or electronically signed authorizations. 47 C.F.R. § 64.1130.

8

See 47 C.F.R. §§ 64.1140, 64.1160. Any charges imposed by the unauthorized carrier on the

subscriber for service provided after this 30-day period shall be paid by the subscriber to the authorized carrier at

the rates the subscriber was paying to the authorized carrier at the time of the unauthorized change. Id.

9

See 47 C.F.R. §§ 64.1140, 64.1170.

10

See 47 U.S.C. § 503.

11

47 C.F.R. § 1.719 (Commission procedure for informal complaints filed pursuant to Section 258

of the Act); 47 C.F.R. § 64.1150 (procedures for resolution of unauthorized changes in preferred carrier).

12

Clear Rate’s Response to Informal Complaint No. IC 13-S3685297, received July 24, 2013.

2

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Federal Communications Commission

DA 14-908

Clear Rate states that authorization was received and confirmed through third party verification

(TPV). The Commission’s rules require that the verification elicit, amongst other things,

confirmation that the person on the call is “authorized to make the carrier change.” 13

We have

reviewed the TPV that Clear Rate submitted with it response. Instead, the verifier instead asks

the person on the call, “To confirm that you are 18 years of age or older and that you are the

decision maker for this phone number, please say yes after the tone.” An affirmative response

does not establish whether the person was authorized to make the carrier change and, therefore

the verifier has not elicited confirmation that the person is authorized to make a carrier change.14

As we emphasized in the Fourth Report and Order, “any description of the carrier change

transaction…shall not be misleading “and verifiers should convey explicitly that “the consumers

will have authorized a carrier change, and not, for instance, an upgrade in existing service.”15

We find that Clear Rate’s actions were in violation of our carrier change rules, and we discuss

Clear Rate’s liability below.16

5.

Clear Rate must remove all charges incurred for service provided to Complainant

for the first thirty days after the alleged unauthorized change in accordance with the

Commission’s liability rules.17

We have determined that Complainant is entitled to absolution

for the charges incurred during the first thirty days after the unauthorized change occurred and

neither their authorized carrier nor Clear Rate may pursue any collection against Complainant for

those charges.18 Any charges imposed by Clear Rate on the subscriber for service provided after

this 30-day period shall be paid by the subscriber at the rates the subscriber was paying to their

authorized carrier at the time of the unauthorized change.19

6.

Accordingly, IT IS ORDERED that, pursuant to Section 258 of the

Communications Act of 1934, as amended, 47 U.S.C. § 258, and Sections 0.141, 0.361 and

1.719 of the Commission’s rules, 47 C.F.R. §§ 0.141, 0.361, 1.719, the complaint filed against

Clear Rate Communications IS GRANTED.

13

See 47 C.F. R. § 64.1120(c)(3)(iii).

14

Cf. Consumer Telcom, Inc., Order on Reconsideration, 27 FCC Rcd 5340 (CGB 2012) ("the

verifier's question, 'Do you have authority to make changes to your long distance service?' did not confirm that the

person was authorizing a change that would result in receiving service from a different carrier").

15

See Fourth Report and Order, 23 FCC Rcd 493 (2008)(emphasis added); see also 47 C.F.R. §

64.1120(c)(3)(iii).

16

If Complainant is unsatisfied with the resolution of this complaint, Complainant may file a

formal complaint with the Commission pursuant to Section 1.721 of the Commission’s rules, 47 C.F.R. § 1.721.

Such filing will be deemed to relate back to the filing date of Complainant’s informal complaint so long as the

formal complaint is filed within 45 days from the date this order is mailed or delivered electronically to

Complainant. See 47 C.F.R. § 1.719.

17

See 47 C.F.R. § 64.1160(b).

18

See 47 C.F.R. § 64.1160(d).

19

See 47 C.F.R. §§ 64.1140, 64.1160.

3

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Federal Communications Commission

DA 14-908

7.

IT IS FURTHER ORDERED that, pursuant to Section 64.1170(d) of the

Commission’s rules, 47 C.F.R. § 64.1170(d), Complainant is entitled to absolution for the

charges incurred during the first thirty days after the unauthorized change occurred and neither

Clear Rate nor their authorized carrier may pursue any collection against Complainant for those

charges.

8.

IT IS FURTHER ORDERED that this Order is effective upon release.

FEDERAL COMMUNICATIONS COMMISSION

Nancy A. Stevenson, Deputy Chief

Consumer Policy Division

Consumer & Governmental Affairs Bureau

4

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