Report No. CC 98-47   COMMON CARRIER ACTION     December 17, 1998

FCC Proposes $2 Million Forfeiture Against Long Distance Direct, Inc. (LDDI) for 
          Apparently Engaging in Slamming and Cramming
                                
     The Commission has proposed a $2 million forfeiture against Long Distance Direct, Inc.
(LDDI) for apparently engaging in slamming, the practice of changing a consumer's telephone
company without that consumer's express approval, and cramming, the practice of placing a
charge on a consumer's telephone bill for a product or service the consumer did not order.  This is
the first forfeiture issued by the FCC in connection with cramming.  LDDI has 30 days to either
pay the forfeiture or show why it should be reduced or not imposed.
                                 
     In a Notice of Apparent Liability (NAL) released today, the Commission determined that
LDDI apparently violated the Communications Act and FCC rules by substituting itself as the
long distance carrier for 25 consumers without their consent.  In addition, LDDI apparently
placed unauthorized product and service charges on the customers' telephone bills.  The
Commission found the violations particularly egregious because LDDI, a long distance reseller,
appears to have submitted the long distance switches and billed consumers for "membership fees"
simply based upon the consumers' calls to a "psychic hotline service" or, in some cases, without
any evidence of contact with the consumer prior to switch or charge.  In many instances,
consumers who discovered that they were switched to LDDI were unable to reach the company
to complain, even after repeated attempts.  Those who were successful in reaching LDDI were
often told that the switch had been authorized by a call made from the consumer's telephone to
the Psychic Friends hotline.  After the consumers contacted LDDI to complain, they discovered
on their next telephone bills that LDDI not only had failed to stop providing service, but also had
imposed additional, unauthorized charges.

     LDDI is a wholly owned subsidiary of Long Distance Direct Holdings (LDDI Holdings),
both of which are headquartered in Pearl River, New York.  The consumers apparently slammed
and crammed by LDDI live in Florida, New Jersey, California, New Hampshire, Colorado,
Maryland, Oklahoma, Virginia, Massachusetts, Arizona, New York, Georgia, Washington,
Illinois, Utah, Indiana, and Michigan.

     Slamming and cramming are the FCC's largest and fastest-growing areas of telephone-
related complaint, respectively.  So far this year, the Commission has handled nearly 20,000
slamming complaints and nearly 4,500 cramming complaints and proposed almost $13 million in
forfeitures in connection with slamming.

     Action by the Commission December 16, 1998, by Notice of Apparent Liability for
Forfeiture (FCC 98-331).  Chairman Kennard, Commissioners Ness, Furchtgott-Roth, Powell and
Tristani.

                              -FCC-

     News media contact:  Rochelle Cohen at (202) 418-0253.
     Common Carrier Bureau contacts:  Colleen Heitkamp at (202) 418-0974 and 
          Darius Withers at (202) 418-7259.
     TTY: (202) 418-2555.