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Consumer Telcom, Inc. Slamming Order

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Released: May 30, 2014
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Federal Communications Commission

DA 14-732

Before the

Federal Communications Commission

Washington, D.C. 20554

In the Matter of

)

)

Consumer Telcom, Inc.

)

IC Nos. 13-S003712

)

13-S3607518

Complaints Regarding

)

13-S3718342

Unauthorized Change of

)

13-S3754504

Subscriber’s Telecommunications Carrier

)

14-S003721

)

ORDER

Adopted: May 28, 2014

Released: May 30, 2014

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

1.

In this Order, we consider the complaints1 alleging that Consumer Telcom, Inc.

(CTI) changed Complainants’ telecommunications service providers without obtaining

authorization and verification from Complainants in violation of the Commission’s rules.2

We

conclude that CTI’s actions did result in unauthorized changes in Complainants’

telecommunications service providers and we grant Complainants’ complaints.

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

See Appendix.

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 14-732

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 Complainants’ complaints alleging that Complainants’

telecommunications service providers had been changed without Complainants’ authorization.11

Pursuant to Sections 1.719 and 64.1150 of our rules,12 we notified CTI of the complaints and

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

See Appendix.

12

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).

2

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Federal Communications Commission

DA 14-732

CTI responded.13

CTI states that authorization was received and confirmed through third party

verification (TPV) in each case. We have reviewed the TPV’s that CTI filed with its responses.

CTI’s verifier in each case stated that the purpose of the recorded conversation was “to confirm

the change in long distance service to Consumer Telecom as your long distance carrier”.

However, the purpose of a TPV recording is to verify a subscriber’s intent to change their

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

carrier change transaction…must 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.”14

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

discuss CTI’s liability below.15

5.

Pursuant to Section 64.1170(b) our rules, CTI must forward to Complainant’s

authorized carrier an amount equal to 150% of all charges paid by the subscriber to CTI along

with copies of any telephone bills issued from CTI to the Complainant.16

Within ten days of

receipt of this amount, Complainant’s authorized carrier shall provide a refund or credit to

Complainant in the amount of 50% of all charges paid by Complainant to CTI. Complainant has

the option of asking their authorized carrier to re-rate CTI charges based on its rates and, on

behalf of Complainant, seek from CTI, any re-rated amount exceeding 50% of all charges paid

by Complainant to CTI. Complainant’s authorized carrier must also send a notice to the

Commission, referencing this Order, stating that is has given a refund or credit to Complainant.17

If Complainant’s authorized carrier has not received the reimbursement required from CTI

within 45 days of the release of this Order, Complainant’s authorized carrier must notify the

Commission and Complainant accordingly. Complainant’s authorized carrier also must notify

the Complainant of his or her right to pursue a claim against CTI for a refund of all charges paid

to CTI.18

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 complaints filed against

CTI, Inc., ARE GRANTED.

13

See Appendix.

14

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

§ 64.1120(c)(3)(iii).

15

If any Complainant is unsatisfied with the resolution of this complaint, such 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 such 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

such Complainant. See 47 C.F.R. § 1.719.

16

See 47 C.F.R § 64.1170(b)(1)(2).

17

See 47 C.F.R. § 64.1170(c).

18

See 47 C.F.R. § 64.1170(e).

3

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Federal Communications Commission

DA 14-732

7.

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

Commission’s rules, 47 C.F.R. § 64.1170(b), that CTI must forward to the authorized carriers an

amount equal to 150% of all charges paid by the subscriber along with copies of any telephone

bills issued from the company to the Complainant within ten (10) days of the release of this

order.

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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Federal Communications Commission

DA 14-732

APPENDIX

INFORMAL

DATE OF

DATE OF

COMPLAINT

COMPLAINT

RESPONSE

NUMBER

13-S003712

December 24, 2013

February 20, 2014

13-S3607518

February 19, 2013

April 5, 2013

13-S3718342

August 28, 2013

September 30, 2013

13-S3754504

November 21, 2013

January 3, 2014

14-S003721

January 10, 2014

February 13, 2014

5

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