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Preferred Billing Petition on Reconsideration Denied

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Released: August 17, 2012

Federal Communications Commission

DA 12-1349

Before the

Federal Communications Commission

Washington, D.C. 20554

In the Matter of
)
)

Inmark, Inc. d/b/a Preferred Billing
)
IC No. 10-S2684451
)
Complaint Regarding
)
Unauthorized Change of
)
Subscriber’s Telecommunications Carrier
)

ORDER ON RECONSIDERATION

Adopted: August 16, 2012

Released: August 17, 2012

By the Acting Chief, Consumer & Governmental Affairs Bureau:

I. INTRODUCTION

1.
In this Order on Reconsideration, we address a Petition for Reconsideration filed by
Inmark, Inc. d/b/a Preferred Billing (Preferred), asking us to reconsider an order issued by our Consumer
Policy Division finding that Preferred changed the Complainant’s telecommunications service provider in
violation of the Commission’s carrier change rules by failing to obtain proper authorization and
verification.1 On reconsideration, we affirm that Preferred’s actions violated the Commission’s carrier
change rules and deny the Petition.2

II. BACKGROUND

2.
Prior to enactment of Section 258,3 the Commission had taken steps to address the
problem of slamming, i.e., the submission or execution of an unauthorized change in a subscriber’s
selection of a provider of telephone exchange service or telephone toll service.4 Section 258 of the
Communications Act, adopted as part of the 1996 Telecommunications Act, prohibits slamming.5 In
December 1998, the Commission adopted rules implementing Section 258.6 Specifically, the


1 See Petition for Reconsideration of Inmark, Inc. d/b/a Preferred Billing (filed May 31, 2011) (Petition), seeking
reconsideration of Inmark, Inc. d/b/a Preferred Billing, Order, 26 FCC Rcd 6357 (CGB Consumer Policy Div. 2011)
(Division Order).
2 See 47 C.F.R. §§ 64.1100 – 64.1190.
3 47 U.S.C. § 258.
4 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 FCC 2d 911, 101 FCC 2d 935, reconsideration denied, 102 F.C.C.2d 503 (1985).
5 47 U.S.C. § 258(a).
6 See 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 Rulemaking, 14 FCC Rcd 1508 (1998)
(Section 258 Order).

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DA 12-1349

Commission adopted rules concerning how carriers must obtain and prove consumer consent to carrier
changes, and their liability to the authorized carrier (and, in turn, the consumer) if they fail to comply with
those rules.7 The Commission stated that these new rules were designed “to take the profit out of
slamming”8 and applied the rules to all wireline carriers.9
3.
In relevant part, the rules require that a submitting carrier follow specific verification
steps to show subscriber consent before submitting or executing a carrier change.10 Specifically, a carrier
must: (1) obtain the subscriber’s written or electronically signed authorization; (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.11 If using an
independent third party to verify the subscriber’s change, the rules require, among other things, that the
third party verification elicit confirmation that the “person on the [verification] call is authorized to make
the carrier change.”12
4.
The Commission also adopted rules governing subscriber liability for carrier charges
when slamming has occurred.13 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.14 Where the subscriber has paid charges to the
unauthorized carrier, the unauthorized carrier must pay 150% of those charges to the authorized carrier,
and the authorized carrier must refund or credit to the subscriber 50% of all charges paid by the subscriber
to the unauthorized carrier.15
5.
On January 9, 2008, the Commission adopted the Fourth Report and Order concerning
carrier changes, which, among other things, amended the third party verification rules.16 In the Fourth
Report and Order
and the rules adopted therein, the Commission required that “any description of the
carrier change transaction . . . must not be misleading”17 and emphasized that third party verifiers must
“convey explicitly that consumers will have authorized a carrier change, and not, for instance, an upgrade


7 See id.
8 See id. at 1512, para. 4; see also id.at 1518-19, para. 13.
9 See id. at 1560, para. 85. The Commission exempted CMRS providers from the verification requirements. See
id.
at 1560-61, para. 85.
10 See 47 C.F.R. § 64.1120; see also 47 U.S.C. § 258(a) (barring carriers from changing a customer’s preferred local
or long distance carrier without first complying with one of the Commission’s verification procedures).
11 See 47 C.F.R. § 64.1120(c). Section 64.1130 details the requirements with respect to letter of agency form and
content for written or electronically signed authorizations. Id. § 64.1130.
12 47 C.F.R. § 64.1120(c)(3)(iii).
13 See 47 C.F.R. §§ 64.1140, 64.1160-70.
14 See id. §§ 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).
15 See id. § 64.1170.
16 See 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, Fourth Report and Order, 23 FCC Rcd 493 (2008) (Fourth Report and Order).
17 See 47 C.F.R. § 64.1120(c)(3)(iii).
2

Federal Communications Commission

DA 12-1349

in existing service [or a] bill consolidation.”18 In the Fourth Report and Order, the Commission stated
that “[t]he record reflects that carriers using ambiguous language to describe the nature of the transaction
may lead to consumer confusion concerning the true purpose of the solicitation call.”19 The Commission
stated that “such practices are misleading and unreasonable, and warrant specific treatment in our rules.”20
6.
The Commission received the subject complaint on June 3, 2010, alleging that
Complainant’s telecommunications service provider had been changed to Preferred without the
complainant’s authorization.21 Pursuant to Sections 1.719 and 64.1150 of the Commission’s rules,22 the
Division notified Preferred of the complaint.23 In response, Preferred stated that authorization was
received and confirmed through third party verification (TPV).24 The Division reviewed the TPV filed
with Preferred’s response. In the TPV, the verifier asked whether the person on the call was the
“authorized person to make changes on the account.”25 The Division stated that a switch from one carrier
to another carrier differs from merely making changes to the customer’s account and that therefore, the
verification language was misleading and prohibited by the Fourth Report and Order.26 As a result, the
Division found that Preferred’s actions violated the Commission’s carrier change rules. By its subject
Petition, Preferred seeks reconsideration of the Division Order.

III. DISCUSSION

7.
Based on the record before us, we affirm the Division Order and deny Preferred’s
Petition. As discussed below, Preferred violated the Commission’s carrier change rules because Preferred
failed to confirm that the person on the TPV was authorized to make a carrier change as required by the
Commission’s rules.
8.
The facts in this case are not in dispute. In the TPV, the verifier asked whether the
person on the call “was the authorized person to make changes on the account.”27 The sole issue here is
whether this verification step complied with the Commission’s requirements for independent third party
verification (TPV) of subscriber consent to change carriers.
9.
In its Petition, Preferred argues that the Division erred by selecting a single line of the
TPV to reach its conclusion, and did not consider the totality of the TPV.28 Preferred states the


18 See Fourth Report and Order, 23 FCC Rcd at 501-502, paras. 18-20.
19 Id. at 501, para. 19.
20 Id.
21 Informal Complaint No. IC 10-S2684451, filed June 3, 2010.
22 47 C.F.R. § 1.719 (Commission procedure for informal complaints filed pursuant to Section 258 of the Act); id. §
64.1150 (procedures for resolution of unauthorized changes in preferred carrier).
23 See Notice of Informal Complaint No. 10-S2684451 to Preferred from the Deputy Chief, Consumer Policy
Division, CGB, dated July 2, 2010.
24 Preferred’s Response to Informal Complaint No. 10-S2684451, received July 28, 2010.
25 Id.
26 See Inmark, Inc. d/b/a Preferred Billing, Order, 26 FCC Rcd 6357 at 6358-59, para. 4.
27 Id.
28 See Petition at 2.
3

Federal Communications Commission

DA 12-1349

Commission does not mandate specific language to be used in TPV calls,29 but simply requires that the
TPV explicitly confirm that a carrier change was authorized.30 According to Preferred, the TPV “clearly
and conspicuously confirms the previously obtained authorization to change long distance service” and
“explicitly conveys that the customer authorized a carrier change when the verifier asks, ‘[d]o you
authorize changing your long distance service to Preferred Billing?’”31 Preferred argues the TPV does not
include any misleading statements “concerning upgrading the customer’s phone service, a specific area of
concern to the Commission” and that changing long distance service “is the only change discussed in the
entire TPV.”32
10.
While our rules do not require specific language, Section 64.1120(c)(3)(iii) does require,
among other things, that all third party verifiers “elicit, at a minimum the identity of the subscriber, [and]
confirmation that the person on the call is authorized to make the carrier change . . . .”33 In the instant
case, the verifier asks whether the person on the call was “the authorized person to make changes on the
account.” As the Division Order stated, a switch from one carrier to another differs from merely making
changes to the consumer’s account.34 Likewise, asking whether the consumer “authorize[s] changing
your long distance carrier to Preferred Billing” does not elicit whether the consumer is in fact authorized
to do so.35
11.
As noted above, in the Fourth Report and Order, the Commission stated that “[t]he
record reflects that carriers using ambiguous language to describe the nature of the transaction may lead
to consumer confusion concerning the true purpose of the solicitation call.”36 The Commission stated that
“such practices are misleading and unreasonable, and warrant specific treatment in our rules.”37 The
Fourth Report and Order explicitly stated that any description of the carrier change transaction should not
be misleading and that verifiers must elicit “confirmation that the person on the call understands that a
carrier change, not an upgrade to existing service, bill consolidation, or any other misleading description
of the transaction, is being authorized.”38 Further, we note that, in the complaint at issue here, the
consumer alleged that s/he was told by the sales representative, that s/he would be receiving a new plan to


29 The Petition cites 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, Third Order on Reconsideration and Second Further Notice of Proposed
Rulemaking, 18 FCC Rcd 5099 (2003). See Petition at 3 n.1.
30 See id. at 3.
31 See id.
32 Id.
33 47 C.F.R. § 64.1120(c)(3)(iii).
34 See Division Order, 26 FCC Rcd at 6358-59, para. 4; see also Consumer Telcom, Inc., Complaints Regarding
Unauthorized Change of Subscriber’s Telecommunications Carrier
, IC Nos. 09-S0295686 and 09-S0295918, Order
on Reconsideration, DA 12-801, at para. 15 (CGB May 22, 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.”).
35 See Petition at 2.
36 Fourth Report and Order, 23 FCC Rcd at 501, para. 18.
37 Id.
38 Id. (emphasis added).
4

Federal Communications Commission

DA 12-1349

reduce the bill, and not that s/he would be switching carriers.39 Indeed, the consumer alleged that the
sales representative told the consumer that the representative was in fact calling on behalf of the
consumer’s authorized carrier in order to lower his/her bill.40 Preferred did not address these allegations,
stating only that the independent third party verifier did not mention “upgrades” during the verification
recording.41 We take these unchallenged consumer allegations as further evidence that this cases involves
exactly the consumer deception that the rule at issue is designed to prevent, i.e., a consumer misled into
believing that he or she will not be discussing a carrier change with the third party verifier.42
12.
The Commission specifically stated that it “seeks[s] to ensure that verifiers confirm the
consumer’s intent to receive service from a different carrier, regardless of whether that is phrased as a
‘change,’ a ‘switch,’ or any other non-misleading term.”43 With respect to the TPV at hand, the verifier’s
question asking whether the person on the call was the “authorized person to make changes on the
account” did not confirm that the person was authorized to make a change that would result in receiving
service from a different carrier. The Division’s selecting “one single line of the TPV” to reach its
conclusion was not error because, as discussed above, all descriptions of the carrier change transaction
must not be misleading.”44
13.
For the reasons stated above, we affirm the Division Order and deny Preferred’s
Petition.

IV. ORDERING CLAUSES

14.
Accordingly, IT IS ORDERED that, pursuant to Section 258 of the Communications
Act of 1934, as amended, 47 U.S.C. § 258, Sections 1.106 and 1.719 of the Commission’s rules, 47
C.F.R. §§ 1.106, 1.719, and authority delegated by Sections 0.141 and 0.361 of the Commission’s rules,
47 C.F.R. §§ 0.141, 0.361, that the Petition for Reconsideration filed by Inmark d/b/a Preferred Billing on
May 31, 2011, IS DENIED.
15.
IT IS FURTHER ORDERED that this Order is EFFECTIVE UPON RELEASE.
FEDERAL COMMUNICATIONS COMMISSION
Kris Anne Monteith
Acting Chief
Consumer & Governmental Affairs Bureau


39 Informal Complaint No. IC 09-S0295686, filed April 21, 2009; Informal Complaint No. 09-S0295918, filed May
26, 2009.
40 FCC Complaint 10-S2684451(a person called the consumer and “impersonated” the consumer’s authorized
carrier, stating that they would lower the consumer’s bill).
41 Preferred did not address these allegations, either in its response to the initial complaint or in the instant Petition.
See Preferred Response to Informal Complaint No. 10-S2684451, received July 28, 2010; Petition at 1-4.
42 See 47 C.F.R 64.1120(c)(3)(iii).
43 Fourth Report and Order, 23 FCC Rcd at 502, para. 20 (emphasis added).
44 See 47 C.F.R. § 64.1120(c)(3)(iii).
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