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                           Before the
                Federal Communications Commission
                     Washington, D.C. 20554

In the Matter of                 )
AT&T Communications, Inc.        )    File No. EB-00-TC-006
Apparent Liability for           )    NAL/Acct. No 200132170015
Forfeiture                       )

                    ORDER ON RECONSIDERATION

   Adopted:  September 5,  2001         Released:   September 11,  

By the Commission:

                        I.   INTRODUCTION

     1.   In  this  Order,  we   deny  a  Petition  for   Limited 
Reconsideration (``Petition'') filed by AT&T Communications, Inc. 
(``AT&T'').  AT&T requests that  the Commission review its  April 
17, 2001 Order of Forfeiture1against AT&T for willful or repeated 
violations of section 258 of  the Communications Act of 1934,  as 
amended (``the Act''),2 and our related rules and orders.  In the 
Forfeiture  Order,  the  Commission  assessed  a  forfeiture   of 
$520,000 against AT&T for changing the preferred carriers for  11 
telephone lines without the consumers' authorization, a  practice 
commonly referred to as ``slamming.''

                         II.  BACKGROUND

     2.   Following an  investigation,  the Commission  issued  a 
Notice of  Apparent Liability  for Forfeiture  (``NAL'')  against 
AT&T concerning  allegations  that  the company  had  slammed  12 
consumers (14  telephone lines).3   Each of  the 12  complainants 
contended that  AT&T  converted  his  or  her  preferred  carrier 
without authorization and provided sworn statements and  evidence 
to that effect.   The Commission found  that AT&T was  apparently 
liable for  a  proposed forfeiture  of  $40,000 for  each  of  12 
violations and $80,000 for each  of 2 violations, resulting in  a 
total proposed forfeiture  of $640,000.4  AT&T  filed a  response 
contesting the Commission's findings of apparent liability  under 
section 258, as well as the amount of the proposed forfeiture.  5  
In the Forfeiture Order, the  Commission rejected most of  AT&T's 
arguments, but found AT&T not  to be liable for three  violations 
and reduced the amount of the forfeiture by $120,000 accordingly. 

     3.   On May  17,  2001, AT&T  filed  its Petition  with  the 
Commission.  In the Petition,  AT&T requests that the  Commission 
rescind that portion of the  Forfeiture Order finding which  held 
AT&T liable for a forfeiture of $40,000 each ($80,000 total)  for 
changing the  preferred carriers  of  two consumers  (Ortega  and 
Patterson) in reliance  on the alleged  authorization of  persons 
other than the  subscribers.7  AT&T argues  that a forfeiture  is 
unwarranted with respect to  the Ortega and Patterson  complaints 
because the undisputed record shows that AT&T complied fully with 
the Commission's prescribed procedures for conducting independent 
third party verification of  these carrier change orders.8   AT&T 
further argues  that  the  Forfeiture Order  is  inequitable  and 
unjustified as a  matter of  sound regulatory  policy because  it 
places carriers such as AT&T  at risk for forfeiture despite  the 
apparent authority  of  persons  with whom  AT&T  or  its  agents 
conduct verification transactions.9

                      III.      DISCUSSION

     III.A.    AT&T Did Not Comply With the Commission's Rules.

     4.   AT&T argues that it was improper for the Commission  to 
assess a  forfeiture  with regard  to  the Ortega  and  Patterson 
complaints because  the  Forfeiture  Order  failed  to  make  any 
contrary findings to  AT&T's showing  that it  complied with  the 
Commission's verification procedures.10  According to AT&T, it is 
undisputed  in  the   record11  that  (1)   AT&T  made   outbound 
telemarketing calls to  Ortega and Patterson;  2) the person  who 
answered each  subscriber's  telephone  authorized  a  change  in 
service to AT&T; (3) its  verification scripts require the  agent 
to ask whether the individual with whom the agent is speaking  is 
responsible  for   telecommunications  service   at  the   called 
number;12  (4)  a  qualified  independent  third  party  verifier 
verified each carrier  change order  with the  individual at  the 
customer's location; and  (5) the verifier  obtained the date  of 
birth of each person as the identifying information.  

     5.   Our rules require that  a carrier obtain  authorization 
from the subscriber prior to making a preferred carrier change.13  
AT&T admits that the persons from whom AT&T obtained its  alleged 
authorization were  not, in  fact,  authorized to  confirm  those 
carrier changes.14  Our slamming rules impose a strict  liability 
standard and  the  test  is  whether  the  carrier  obtained  the 
subscriber's authorization and verification of that authorization 
before submitting or  executing a carrier  change order.15   AT&T 
failed this test because the undisputed evidence shows that  both 
Ortega and Patterson had their long distance service switched  to 
AT&T without  their  authorization.  The  record  indicates  that 
someone named Dwight Lewis (Lewis) requested a change in Ortega's 
service and that one Sam Carillo (Carillo) requested a change  in 
Patterson's service.  Mr. and Mrs.  Ortega state under oath  that 
they do  not  know anyone  named  Dwight Lewis.   Similarly,  Mr. 
Patterson attests that he does not know anyone named Sam Carillo.  
Given these facts, it is far  from clear that AT&T's records  are 
correct.  In any event, it is incumbent upon AT&T to ensure  that 
its procedures elicit enough  information to determine that  they 
are  speaking   with  and   obtaining  authorization   from   the 

     6.   AT&T insists  that it  believed in  good faith,  albeit 
mistakenly, that those carrier selections had been authorized  by 
persons with a right to effectuate those changes, and it obtained 
and verified the selections  in accordance with the  Commission's 
rules.16  AT&T argues that the  Forfeiture Order made no  finding 
that AT&T knew or  had reason to know  that the individuals  with 
whom it conducted the authorization and verification transactions 
were in fact unauthorized to  place the carrier change  orders.17  
This argument fails because neither sections 258 or 503(b) of the 
Act nor our rules require us to find that a carrier had  specific 
intent to  violate our  rules.  The  Commission has  specifically 
determined to  hold  carriers  liable for  both  inadvertent  and 
intentional  unauthorized  changes   to  subscribers'   preferred 
carriers, finding that doing so will reduce overall incidence  of 
slamming and  is consistent  with section  258.18    Accordingly, 
even assuming that AT&T was acting in good faith, section 258 and 
our rules hold carriers liable for slamming regardless of whether 
the unauthorized  preferred  carrier change  was  intentional  or 

     III.B.    The Commission's Forfeiture is Fully Justified  As 
          a Matter of Policy.

     7.   AT&T  argues   that  the   Commission   inappropriately 
assessed a  forfeiture  despite Lewis  and  Carillo's  ``apparent 
authority'' to make a  preferred carrier change.19  AT&T  further 
argues  that  the  forfeiture  is  unwarranted  because  of   the 
Commission's own recent effort, in  the Third Report and  Order20 
on slamming,  to prescribe  criteria for  determining whether  an 
individual is authorized to act on behalf of a subscriber to make 
a  carrier  selection  for  that  account.21   We  reject   these 
arguments.  As AT&T acknowledges, the rules adopted in the  Third 
Report and Order  were not in  effect at the  time of the  events 
underlying the forfeiture in this case.22  Therefore, they do not 
apply to the facts of this case. 

     8.   AT&T next  argues that  the forfeiture  is  unwarranted 
because AT&T properly  obtained the authorization  to switch  the 
complainants' preferred carrier from  a person having  ``apparent 
authority.''23  In support of its argument, AT&T points out  that 
the Commission stated in  the Second Report  and Order and  FNPRM 
that ``it is unclear  how a marketing carrier  would know if  the 
person who has authorized a carrier change is in fact  authorized 
to order  telecommunications  services.''24  But  AT&T  fails  to 
mention that  the Commission's  concern was  that adoption  of  a 
proposal  allowing  more  than  one  person  in  a  household  to 
authorize preferred carrier changes could lead to an increase  in 
slamming, because a slamming carrier could simply submit  changes 
requested by unauthorized persons and claim that it thought  that 
these persons were authorized.25  Given the very real possibility 
that this  precise scenario  occurred in  the instant  case,  the 
statement in the NPRM provides no support for AT&T's argument.26 

     9.   Finally, AT&T argues that the Forfeiture Order provides 
no reasonable  steps  that AT&T  could  have taken  to  determine 
whether Dwight Lewis and Sam  Carillo were in fact authorized  to 
change  the   preferred  carrier   for  Ortega   and   Patterson, 
respectively.27  AT&T's  argument  misses the  point.   As  noted 
above, AT&T  is strictly  liable for  any unauthorized  preferred 
carrier changes  it  submits  to the  LEC,  and  ultimately  must 
determine for itself how to  ensure that no unauthorized  changes 
occur.  Should AT&T's methods prove unsuccessful, the company  is 
liable for any resulting unauthorized changes.28 

     10.  After reviewing all  the information filed  by AT&T  in 
its Petition, we find that AT&T  has failed to identify facts  or 
circumstances to persuade us that  we should rescind in part  the 
Forfeiture Order, or that a  further reduction of the  forfeiture 
amount is warranted.

                      IV.  ORDERING CLAUSES

     11.  Accordingly, for all  the reasons stated  above, IT  IS 
ORDERED, pursuant to  section 405 of  the Communications Act,  as 
amended, 47 U.S.C.  405,  and section 1.106 of the  Commission's 
rules,  47  C.F.R.    1.106,  that  the  Petition  for   Limited 
Reconsideration filed by AT&T Communications, Inc. IS DENIED.

     12.  IT IS FURTHER ORDERED pursuant to section 503(b) of the 
Act,  47  U.S.C.    503(b),   and  section  1.80(f)(4)  of   the 
Commission's  rules,   47   C.F.R.     1.80(f)(4),   that   AT&T 
Communications,  Inc.  SHALL   FORFEIT  to   the  United   States 
Government the sum of five hundred and twenty thousand ($520,000) 
for violating section 258 of the Act, 47 U.S.C.  258.
     13.  IT IS  FURTHER ORDERED  that a  copy of  this Order  On 
Reconsideration shall be sent by certified United States mail  to 
AT&T Communications, Inc., 295 North Maple Avenue, Basking Ridge, 
New Jersey, 07920.


                         Magalie Roman Salas


1         AT&T Communications, Inc., Order of Forfeiture, 16  FCC 
Rcd 8907 (2001) (Forfeiture Order).
2         47 U.S.C.  258.
3         AT&T   Communications,   Inc.,   Notice   of   Apparent 
Liability, 16 FCC Rcd 438 (2001) (AT&T NAL).
4         AT&T NAL, 16 FCC  Rcd  438 at  1.  The Commission  has 
authority pursuant  to section  503(b) of  the Act,  47 U.S.C.   
503(b), to assess a forfeiture  penalty against a common  carrier 
if the Commission determines that the carrier has ``willfully  or 
repeatedly'' failed to comply with  the provisions of the Act  or 
with any rule, regulation, or order issued by the Commission.
5         AT&T Communications,  Inc.,  Opposition  to  Notice  of 
Apparent Liability, File No. EB-TC-006 (filed Jan. 22, 2001) (NAL 
6         Forfeiture Order, 16 FCC Rcd 8907 at  16-17
7         See Petition at 1-2.
8         See Petition at 1-2.
9         See Petition at 1-2.
10   Petition at 4-5.
11   In the Forfeiture Order, the  Commission did not attempt  to 
reach any conclusion  regarding the  veracity of  each step  AT&T 
claims it took in  its authorization and verification  processes. 
See  NAL  Opposition  at  17-18.    See  also  Petition  at   4-5 
(describing the steps  in AT&T's  authorization and  verification 
12   See Declaration of Rebecca Yung-Eng, Exhibit D4, Letter from 
Peter Jacoby, General Attorney, AT&T to Catherine Seidel,  Chief, 
Telecommunications Consumer's  Division,  FCC  dated  August  16, 
2000.  AT&T  provided no  scripts, nor  did it  provide tapes  of 
these verification calls.
13   See 47 C.F.R.  64.1120(a)(1)(i).
14   See NAL Opposition at 17.
15   See  Implementation  of  the  Subscriber  Carrier  Selection 
Changes Provision  of  the  Telecommunications Act  of  1996  and 
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, 
1541 (1998) (Second Report and Order and FNPRM).
16   See NAL Opposition at 20.
17   Petition at 5.
18   See Second Report and  Order and FNPRM, 14  FCC Rcd 1508  at 
19   Petition at 8.
20   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, Third Report and Order, 15 FCC Rcd  15996 
(2000) (Third Report and Order).
21   Petition at 8.
22   See Petition at 9-10.
23   See Petition at 1, 5.
24   NAL Opposition at  19 (quoting Second  Report and Order  and 
FNPRM, 14 FCC Rcd 1508 at  177).
25   See Second Report and Order and FNPRM, 14 FCC Rcd 1508 at   
26   We also note that this statement was made in the context  of 
a notice of  proposed rulemaking (``NPRM'').   The purpose of  an 
NPRM is not to promulgate rules or state policy, but to stimulate 
comments and debate to aid in the rulemaking process. See  Radio-
Television News Directors Association v.  FCC, 184 F.3d 872,  886 
at note 16  (D.C. Circ.  1999) citing  Commodity Futures  Trading 
Comm'n  v. Schor, 478 U.S. 833, 845 (1986) (stating that the NPRM 
does not bind the FCC, which is free to adopt a contrary position 
after consideration of public comments).
27   See Petition at 6.
28   Although the rules promulgated in the Third Report and Order 
do not apply to this case, they are currently in effect.  In that 
order, the  Commission  suggests  how  a  carrier  may  determine 
whether it  is speaking  with an  individual authorized  to  make 
choices for  the  account  at issue.   There  is  no  indication, 
however, that merely asking one of those questions is  sufficient 
to ensure that the carrier is speaking with an individual who  is 
authorized to make a carrier change. See Third Report and  Order, 
15 FCC Rcd 15996 at 51, note 154.