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Preferred Slam Order

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Released: May 23, 2014
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Federal Communications Commission

DA 14-702

Before the

Federal Communications Commission

Washington, D.C. 20554

In the Matter of

)

)

Preferred Long Distance, Inc.

)

IC No. 13-S3614948

)

Complaint Regarding

)

Unauthorized Change of

)

Subscriber’s Telecommunications Carrier

)

ORDER

Adopted: May 22, 2014

Released: May 23, 2014

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

1.

In this Order, we consider the complaint filed by Complainant1 alleging that

Preferred Long Distance, Inc., (PLD) changed Complainant’s telecommunications service

provider without obtaining authorization and verification from Complainant in violation of the

Commission’s rules.2

We conclude that PLD’s actions did result in an unauthorized change in

Complainant’s telecommunications service provider 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 of

1

Informal Complaint No. IC 13-S3614948, filed May 12, 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 14-702

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 May 12, 2013, alleging that

Complainant’s telecommunications service provider had been changed to PLD without

Complainant’s authorization. Pursuant to Sections 1.719 and 64.1150 of our rules,11 we notified

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).

2

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Federal Communications Commission

DA 14-702

PLD of the complaint and PLD responded on April 11, 2013.12

PLD states that authorization

was received and confirmed through third party verification (TPV). We have reviewed the TPV

that PLD filed with its response. PLD’s verifier stated that the purpose of the recorded

conversation was, “to avoid any unauthorized changes to your phone service and to confirm

accurate data.” 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 must convey

explicitly that “the consumers will have authorized a carrier change, and not, for instance, an

upgrade in existing service.”13

We find that PLD actions were in violation of our carrier change

rules, and we discuss PLD’s liability below.14

5.

Pursuant to Section 64.1170(b) our rules, PLD must forward to AT&T an amount

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

bills issued from PLD to the Complainant.15

Within ten days of receipt of this amount, AT&T

shall provide a refund or credit to Complainant in the amount of 50% of all charges paid by

Complainant to PLD. Complainant has the option of asking AT&T to re-rate PLD charges based

on AT&T rates and, on behalf of Complainant, seek from PLD, any re-rated amount exceeding

50% of all charges paid by Complainant to PLD. AT&T must also send a notice to the

Commission, referencing this Order, stating that is has given a refund or credit to Complainant.16

If AT&T has not received the reimbursement required from PLD within 45 days of the release of

this Order, AT&T must notify the Commission and Complainant accordingly. AT&T also must

notify the Complainant of his or her right to pursue a claim against PLD for a refund of all

charges paid to PLD.17

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 by

Complainant against Preferred Long Distance, Inc., IS GRANTED.

12

PLD’s Response to Informal Complaint No. IC 13-S3614948, received April 11, 2013.

13

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

§ 64.1120(c)(3)(iii).

14

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.

15

See 47 C.F.R § 64.1170(b)(1)(2).

16

See 47 C.F.R. § 64.1170(c).

17

See 47 C.F.R. § 64.1170(e).

3

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Federal Communications Commission

DA 14-702

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 PLD must forward to AT&T 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 FURTHERED 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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