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Federal Communications Commission
Washington, D.C. 20554
In the Matter of )
) File No. EB-00-TC-053
Verizon Communications ) NAL/Acct. No. X3217-010
Adopted: October 16, 2000 Released: October
By the Chief, Enforcement Bureau:
In this Order, we adopt a Consent Decree terminating an
investigation into possible violations of section
64.1120(a)(1)(ii) of the Commission's rules by Bell Atlantic
Communications, Inc. d/b/a Verizon Long Distance (Verizon).
On May 19, 2000, Verizon voluntarily disclosed to the Enforcement
Bureau (Bureau) that it could not locate records of third-party
verifications (``TPV'') for an estimated 20-25,000 residential
consumers who had recently switched their preferred carrier to
Verizon during an inbound call to one of the residential sales
and service centers (``RSSCs''). Verizon's subsequent
investigation disclosed that the number of affected customer
lines was approximately 34,000. The Bureau has received no
evidence, such as complaints from any of the affected customers,
indicating that Verizon changed the customers' preferred
interexchange carrier without proper authorization. Accordingly,
the issues before us solely relate to third-party verification
and record maintenance, and not to the practice commonly known as
The Bureau and Verizon have negotiated the terms of a Consent
Decree that would terminate the staff's investigation. A copy of
the Consent Decree is attached and is incorporated by reference.
As detailed in the Consent Decree, Verizon has taken and/or
agreed to take various actions to rectify the matter and prevent
a recurrence, including, but not limited to: contacting and
crediting affected residential consumers; requiring TPV
contractors both to formally train their employees at the time of
hiring and at least twice per year thereafter on Commission rules
and policies, and to sign an agreement to take disciplinary
action against their employees who violate section
64.1120(a)(1)(ii); and periodic monitoring of TPV contractors to
ensure compliance with the Commission's third-party verification
and record retention rules. Verizon has also agreed, inter alia,
to observe the verification activity of the TPV contractors
through regular on-site visits and/or telephonic monitoring, and
to perform monthly audits of all TPV contractor's operations.
We have reviewed the terms of the Consent Decree and evaluated
the facts before us. In light of Verizon's commitment to be
bound by various principles regarding its third-party
verification and records retention procedures, we believe that
the public interest would be served by approving the Consent
Decree and terminating the investigation.
Based on the record before us, and in the absence of material new
evidence relating to this matter, we conclude that there are no
substantial and material questions of fact as to whether Verizon
possesses the basic qualifications, including its character
qualifications, to hold or obtain any FCC licenses or
Accordingly, IT IS ORDERED, pursuant to section 4(i) of the
Communications Act, 47 U.S.C. § 154(i), and the authority
delegated by sections 0.111 and 0.311 of the Commission's rules,
47 C.F.R. §§ 0.111, 0.311, that the attached Consent Decree IS
IT IS FURTHER ORDERED that the Commission staff inquiry into the
matter described here IS TERMINATED.
FEDERAL COMMUNICATIONS COMMISSION
David H. Solomon
Chief, Enforcement Bureau
Federal Communications Commission
Washington, D.C. 20554
In the Matter of )
) File No. EB-00-TC-053
Bell Atlantic Communications, Inc. ) NAL/Acct No. X3217-
1. The Enforcement Bureau of the Federal Communications
Commission (``FCC'' or ``Commission'') and Bell Atlantic
Communications, Inc. d/b/a Verizon Long Distance (``Verizon'')
hereby enter into a Consent Decree terminating an informal Bureau
investigation into possible violations of section
64.1120(a)(1)(ii) of the Commission's rules, which, among other
things, requires telecommunications carriers to maintain and
preserve records showing that they have verified consumer
authorization to change the consumer's telecommunications service
provider. Verizon is a common carrier that provides interstate
interexchange telecommunications services in the State of New
York pursuant to tariffs on file with the Commission. Verizon
voluntarily brought this matter to the Bureau's attention.
For the purposes of this Consent Decree the following definitions
a) ``Commission'' or ``FCC'' means the Federal
b) ``Bureau'' means the Enforcement Bureau of the Federal
c) ``Verizon'' means Bell Atlantic Communications, Inc., d/b/a
Verizon Long Distance;
d) ``Parties'' means Verizon Communications Inc., its
affiliate Verizon, and the Commission or Bureau;
e) ``Adopting Order'' means an Order of the Bureau
adopting the terms and conditions of this Consent Decree;
f) ``Effective Date'' means the date on which the
Bureau releases the Adopting Order.
g) ``PIC Change'' is an order transmitted to a local
exchange carrier (``LEC'') by an interexchange carrier or
request from a consumer to a LEC requesting a change of the
consumer's preferred interexchange and/or intraLATA toll
h) ``Residence Sales and Service Centers'' refers to
telephone company service centers that serve residential
service consumers. Among other things, employees at these
centers accept requests from residential service consumers to
change their presubscribed interexchange carrier and initiate
the processing of these requests.
The Parties agree that the provisions of this Consent Decree
shall be subject to final approval by the Bureau by incorporation
of such provisions by reference in an Adopting Order of the
The Parties agree that this Consent Decree shall become effective
on the date on which the Bureau releases the Adopting Order.
Upon release, the Adopting Order and this Consent Decree shall
have the same force and effect as any other Order of the
Commission and any violation of the terms of this Consent Decree
shall constitute a violation of a Commission Order entitling the
Commission to exercise any and all rights and to seek any and all
remedies authorized by law for the enforcement of a Commission
Verizon admits the jurisdiction of the Commission for purposes of
this Consent Decree and the Adopting Order.
Verizon waives any rights that it may have to further procedural
steps and any rights it may have to seek judicial review or
otherwise challenge or contest the validity of the Adopting Order
or this Consent Decree.
Verizon waives any rights it may have under any provision of the
Equal Access to Justice Act, 5 U.S.C. § 504.
Statement of Facts
Verizon provides long distance service to residential service
customers in New York, and employees in its affiliated telephone
company residence sales and service centers (``RSSCs'') handle
incoming calls from consumers who want to change their
presubscribed carrier. On May 19, 2000, Verizon voluntarily
disclosed to the Bureau that it could not locate records of
third-party verifications (``TPV'') for an estimated 20-25,000
residential consumers who had recently switched their preferred
carrier to Verizon during an inbound call to one of the RSSCs.
Verizon's subsequent investigation disclosed that the number of
affected customer lines was approximately 34,000. Verizon
represented to the Bureau that it had recently discovered the
problem, and that the missing records related to PIC changes
dating back to March 2000.
Verizon's auditing of the billings from its TPV contractor, The
Sutherland Group, Ltd. (``Sutherland''), revealed that Sutherland
was charging Verizon for fewer TPV transactions than Verizon
expected based on the number of carrier selection orders
generated through the RSSC. Although not all inbound requests
for long distance service required TPV, Verizon nevertheless
recognized that a problem existed.
Verizon represents that Sutherland contributed to the problem of
locating verification records by storing verification data in a
manner that was difficult to track and retrieve. For example,
Verizon noted that Sutherland, after verifying a customer's
carrier selection for multiple lines at a single residence,
stored the information according to the billing telephone number,
which created problems when retrieving and recording the related
working telephone numbers in the accounts that were verified
during the same transaction. In addition, Verizon pointed out
that Sutherland stored verifications for PIC changes on existing
additional lines under the billing telephone numbers, and that
Sutherland stored some residential verifications in its business
Verizon also represents that it encountered other problems
reconciling the data. For example, an area code split in Long
Island, New York resulted in verification records being stored
under the original area code rather than the new one. In other
cases, Verizon states that when its service representative
assigned a telephone number to a subscriber whose area code
changed prior to completion of the order, the service
representative performed the TPV under the old area code, but the
completed service order record reflected the new one. In
addition, Verizon admits that in some cases, the RSSC
representative may have inadvertently given incorrect customer
information to Sutherland, or Sutherland may have inadvertently
entered incorrect information into its database.
Verizon represents that it promptly and voluntarily implemented a
number of remedial actions with respect to approximately 34,000
residential customers for whom it could not locate TPV records.
These actions include the following:
a) It has contacted customers to reconfirm PIC change
authorizations and is crediting these consumers up to the
date of the completed TPV or the consumers' stated desire to
switch to another carrier. Verizon represents that, to date,
some 10,000 of these customers still have not responded to its
repeated attempts to reach them. Verizon will credit the
consumers that it has been unable to reach for all long
distance charges since they were switched to Verizon through
October 18, 2000. If any of these customers contacts Verizon
to dispute his or her carrier selection before April 19, 2001,
Verizon will process a PIC change at its expense and credit
the customer for all Verizon charges billed since October 18,
b) It continues to work with Sutherland to ensure that
source code modifications are implemented to address the
database entry and retrieval problems identified in the
c) It has held, except during the August 2000 work stoppage,
and will continue to hold, monthly performance review meetings
and discussions with senior executives of Sutherland to
discuss programming and system changes and staffing levels, to
review changes in procedures, and to conduct joint observation
sessions to identify any training process or performance
d) It deployed a new feature in its ordering systems that
prevents a service representative from initiating an order
before TPV has been successfully obtained by requiring a
confirmation code on every Verizon presubscription order for
which TPV is necessary. This code is communicated to the RSSC
by the third-party verifier only after TPV has been
successfully completed. The service order systems will not
process such an order if it has no code or if the code
provided does not conform to the encryption algorithm
established with the third-party verifier. Any questionable
orders are immediately forwarded to a special group in Verizon
for investigation and resolution.
e) All customer service representatives and supervisory
employees in the RSSCs were retrained on TPV requirements and
procedures, emphasizing the legal requirements and making
clear that failure to comply with these requirements was also
a violation of the company's code of conduct and would result
in disciplinary action, including dismissal.
f) Where Sutherland's records indicated that an RSSC
employee had a high incidence of unverified PIC change orders,
the company monitored the employee's customer contacts.
Consistent with the company's labor practices, if any problems
were found with these representatives or other representatives
identified through random monitoring, the representative was
reinstructed on the required procedures. As a result of these
actions, the company has taken initial disciplinary action
against several employees, had ``second discussions'' with
some of those from the initial group, and subsequently issued
formal warnings of potential dismissal against some employees.
In addition, the company terminated one supervisor for
falsifying reports of her monitoring activities.
g) It appointed compliance managers in each RSSC director
group to serve as the primary contact point for compliance
issues, including compliance with the Commission's
requirements regarding PIC conversions.
During its May 19, 2000 meeting with the Bureau, Verizon
described the corrective actions taken and the schedule to be
followed with respect to further corrective actions. Verizon
made follow-up visits and calls to the Bureau to update the
Commission staff on the course of the investigation and the
status of the corrective actions taken. Verizon memorialized the
information presented to the Bureau in subsequent letters.1
Terms of Settlement
In consideration for the termination by the Bureau of its
investigation into whether Verizon has violated section
64.1120(a)(1)(ii) of the Commission's rules, 47 C.F.R. §
64.1120(a)(1)(ii), pertaining to TPV record retention, and in
accordance with the terms of this Consent Decree, Verizon agrees
to the following terms.
Verizon shall make a voluntary contribution to the United States
Treasury in the total amount of $250,000 (two hundred fifty
thousand dollars). This amount shall be paid within 30 days of
the date on which the order adopting this Consent Decree becomes
final. Such contribution shall be made, without further protest
or recourse, by certified check, cashiers check, or money order
drawn to the order of the Federal Communications Commission, and
shall be mailed to the Federal Communications Commission, P.O.
Box 73482, Chicago, Illinois 60673-7482.
Verizon agrees to subject its employees and TPV contractors to
the following oversight mechanisms to help insure compliance with
PIC change rules:
a) Upon entering into any contract with a TPV contractor and
within 30 days of the effective date of this Consent Decree
for existing TPV contracts, Verizon shall require that the TPV
1) both at the time of hiring and at least twice a
year thereafter, formally train its employees on the
Commission's rules regarding PIC-change requests. Should
those rules and orders change, Verizon will ensure that its
TPV contractors are promptly apprised of such changes so
that the TPV contractors can promptly update their training
material to reflect the new rules.
2) sign an agreement with Verizon specifying that any
of the verifiers found to have engaged in practices that
violate section 64.1120(a)(1)(ii) of the Commission's rules
shall be subject to disciplinary action, including, at a
minimum, periodic telephonic monitoring described in
paragraph 16(b) and retraining on Commission PIC-change
rules and policies. Further, any pattern of such practices
by the contractor shall subject the contractor to prompt
termination of its relationship with Verizon.
b) Verizon shall observe the verification activity of
the TPV contractor through regular on-site visits
and/or telephonic monitoring to ensure that the
verifiers are operating in compliance with the
Commission's verification and record retention rules.
c) Verizon shall perform monthly audits of all TPV
contractors' operations comparing orders forwarded by
the Verizon representative to the verifier, and orders
actually verified by the verifier. If this comparison
reveals that any of the unverified orders were the
result of noncompliance with Commission rules, Verizon
agrees to further audit the verifier's operations and
implement necessary corrective measures.
While this Consent Decree is in effect, Verizon agrees to
maintain and make available to the Bureau, on a quarterly basis
and within 14 days of the receipt of any specific written request
from the Bureau, business records demonstrating compliance with
the terms and provisions of this Consent Decree.
In light of the covenants and representations in this Consent
Decree, and in light of the fact that Verizon brought this matter
voluntarily to the Bureau's attention, the Bureau agrees to
terminate its investigation into possible violations of section
64.1120(a)(1)(ii) of Commission rules in connection with the
facts specified above, without any finding of liability on the
part of Verizon.
Nothing in this Consent Decree shall prevent the Commission from
adjudicating complaints against Verizon or its affiliates for
alleged misconduct regarding unauthorized PIC conversions or for
any other type of alleged misconduct regardless of when such
misconduct took place, or from instituting new investigations or
enforcement proceedings against Verizon in the event of alleged
future misconduct. If such enforcement proceeding is initiated,
Verizon's earlier conduct as set out in this Consent Decree may
be adduced, but not for the purpose of assessing monetary
This Consent Decree is for settlement purposes only and Verizon
does not admit any liability for violating Commission rules in
connection with the matters that are the subject of this Consent
The Commission expressly reserves the right to investigate and
take enforcement action against Verizon if the Commission staff
receives consumer complaints or other information indicating that
Verizon may have violated section 258 of the Communications Act
of 1934, as amended, (Act) and the Commission rules and orders
governing PIC conversions by failing to obtain authorization to
effect the PIC changes that are the subject of this Consent
Decree. Such enforcement action may include, inter alia, a
monetary forfeiture pursuant to Section 503(b) of the Act.
The Parties agree that any provision of the Consent Decree that
conflicts with any subsequent rule or order adopted by the
Commission will be superseded by such Commission rule or order.
The Parties agree that this Consent Decree shall expire twenty-
four (24) months from the release date of the Order adopting this
Consent Decree. Verizon shall issue a report to the Bureau
within 60 days from the release date demonstrating compliance
with the terms and provisions herein.
This Consent Decree may be signed in counterparts.
For the Enforcement Bureau, For Bell Atlantic
Federal Communications Commission
David H. Solomon Maura Breen
Chief Group President - Verizon
1 Letters from Marie T. Breslin, Director Federal Regulatory,
Verizon Communications, to Catherine W. Seidel, Chief,
Telecommunications Consumers Division, Enforcement Bureau,
F.C.C., File No. EB-00-TC-053 (July 5, 2000 and August 16, 2000).