NOTICE ********************************************************* NOTICE ********************************************************* This document was originally prepared in Word Perfect. If the original document contained-- * Footnotes * Boldface & Italics --this information is missing in this version The document format (spacing, margins, tabs, etc.) is changed too. If you need the complete document, download the Word Perfect version. For information about downloading documents (FTP) see file how2ftp. File how2ftp (.txt & .wp) is in directory \pub\Public_Notices\Miscellaneous. ***************************************************************** ******** TRANSMITTED FOR FCC RECORD ONLY $// N.A.L. for Forfeiture, Excel Telecomm., Inc., File No. ENF 95-15, DA 95-1833 //$ $/ 47 C.F.R.  64.1100 Verification of orders for long distance service generated by telemarketing /$ Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D. C. 20554 DA 95-1833 In the Matter of) ) File No. ENF-95-15 EXCEL TELECOMMUNICATIONS, INC. ) ) NAL/Acct. No. 516EF0005 ) Apparent Liability for Forfeiture) NOTICE OF APPARENT LIABILITY FOR FORFEITURE Adopted: August 18, 1995; Released: August 18, 1995 By the Chief, Common Carrier Bureau: I. INTRODUCTION 1. By this Notice of Apparent Liability for Forfeiture ("NAL"), we initiate enforcement action against Excel Telecommunications, Inc. ("Excel"). For the reasons discussed below, we find that Excel willfully or repeatedly violated Commission rules and orders by changing the primary interexchange carrier ("PIC") designated by Mr. Bruce Adelman ("Adelman") of Los Angeles, California and Mrs. Robert J. Blake ("Blake") of Altadena, California, without Adelman's or Blake's authorization. Based upon our review of the facts and circumstances surrounding the violations, we find that Excel is apparently liable for a forfeiture in the amount of eighty thousand dollars ($80,000). II. BACKGROUND 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 later modified the requirement to allow IXCs to initiate PIC changes if they had "instituted steps to obtain signed LOAs." In 1992, the Commission again revised its rules because it continued to receive complaints about unauthorized PIC changes. 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, returnable 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 recent 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. 4. On March 13, 1995 and November 7, 1994, the Commission received written complaints from Adelman and Blake, respectively, alleging that Excel had converted Adelman's and Blake's prescribed long distance service provider from AT&T Corporation ("AT&T") to Excel without either Adelman's or Blake's authorization. Both Adelman and Blake state that the "Residential Service Request Forms" ("authorization form") forwarded to them by Excel as verification of their requests to have their long distance service switched to Excel, bear forged signatures and fabricated social security numbers. 5. Subsequently, the Common Carrier Bureau's Enforcement Division (the "Division") sent a letter to Excel directing it to provide specific information regarding the allegations listed in both the Adelman and Blake complaints. In response to the complaints, Excel explains that its marketing is based exclusively on obtaining a written LOA from a prospective customer, typically as the result of an in-person, one-on-one presentation by one of its independent marketing agents. Excel states that its practice is to review LOAs obtained from prospective customers to ensure completeness and that it occasionally checks social security numbers. Excel states that it is unable to ascertain whether these review procedures were implemented with regard to the Adelman and Blake LOAs or whether the signatures are authentic. Excel concedes that it is possible that Adelman's and Blake's signatures and social security numbers may have been forged by the independent marketing representatives who submitted the forms at issue. III. DISCUSSION 6. We have carefully evaluated the information submitted in connection with Adelman's and Blake's informal complaints and conclude that Excel is apparently liable for forfeiture for willful or repeated violation of the Commission's rules and PIC change requirements. We find Excel's apparent actions particularly egregious. It appears that on or about August 22, 1994 and August 30, 1994, Excel submitted two PIC change requests to Pacific Bell, based on apparently forged LOAs, which resulted in the conversion of both Adelman's and Blake's telephone service from AT&T to Excel. The statements and information provided by Adelman, Blake, and Excel leave virtually no doubt that the LOAs were forged, the social security numbers falsified, and consequently, that Excel lacked the requisite authorization to request a PIC change to either Adelman's or Blake's long distance service. With respect to the Adelman complaint, there is no similarity between the signature on Adelman's complaint and his purported signature on the LOA form that Excel used as the basis for the PIC change submitted to Pacific Bell. With respect to the Blake complaint, information obtained from the complainant indicates that neither Mr. or Mrs. Blake ever met with an Excel representative nor were they ever contacted by telephone regarding a switch in their long distance service. Further, the complainant confirmed that Mr. Blake's name is misspelled, his signature is forged, and that the purported social security number appearing on the form is not his. Under these circumstances, we conclude that Excel's apparent actions were in willful or repeated violation of the Commission's PIC change rules and orders and that a substantial forfeiture penalty is appropriate. 7. 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 Adelman's and Blake's telephone lines as two violations. After weighing the circumstances surrounding the violation, we find that Excel is apparently liable for a forfeiture of forty thousand dollars ($40,000) for each of the unauthorized conversions, resulting in a total forfeiture of eighty thousand dollars ($80,000). Excel 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. In this regard, we note that the Commission has previously held that a licensee's gross revenues are the best indicator of its ability to pay a forfeiture and that use of gross revenues to determine a party's ability to pay is reasonable, appropriate, and a useful yardstick in helping to analyze a company's financial condition for forfeiture purposes. We will give full consideration to any financial information provided by Excel before assessing a final forfeiture amount. IV. CONCLUSIONS AND ORDERING CLAUSES 8. We have carefully reviewed the information submitted in connection with Adelman's and Blake's informal complaints and conclude that on or about August 22, 1994 and August 30, 1994, Excel apparently converted or caused a local exchange carrier to convert Adelman's and Blake's telephone lines without either Adelman's or Blake's authorization through the use of apparently forged LOAs. We further conclude that Excel thereby 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). 9. Accordingly, IT IS ORDERED, pursuant to Section 503(b) of Communications Act of 1934, as amended, 47 U.S.C.  503(b), and Section 1.80 of the Commission's rules, 47 C.F.R.  1.80, that Excel Telecommunications, Inc. IS HEREBY NOTIFIED of an Apparent Liability for Forfeiture in the amount of eighty thousand dollars ($80,000) for its willful or repeated violation of the Commission's PIC change rules and orders, 47 C.F.R.  64.1100; PIC Change Order, 7 FCC Rcd 1038 (1992); Allocation Order, 101 FCC 2d 911 (1985); Waiver Order, 101 FCC 2d 935 (1985). 10. 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, Excel Telecommunications, Inc. 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. 11. IT IS FURTHER ORDERED that a copy of this Notice of Apparent Liability for Forfeiture SHALL BE SENT by certified mail to Kenny Troutt, Chairman, President and Chief Executive Officer of Excel Telecommunications, Inc., 9101 LBJ Freeway, Suite 800, Dallas, Texas 75243. FEDERAL COMMUNICATIONS COMMISSION Kathleen M.H. Wallman Chief, Common Carrier Bureau