Summary / Background

• Slamming is the practice of changing consumers' telecommunications carriers without their knowledge or permission.

• To deter slamming, the Federal Communications Commission (FCC) adopted new anti- slamming rules in December, 1998 by:
  1. Strengthening the liability rules to take the profit out of slamming by absolving consumers of 30 days of slamming charges.
  2. Strengthening the procedures by which carriers must obtain customer verification of preferred carrier change requests.
  3. Broadening the scope of these verification procedures to apply to local as well as long distance carriers.
  4. Establishing rules governing preferred carrier freezes, which prohibit carriers from changing a consumer's preferred carrier without that consumer's express authorization to "lift the freeze."

• The majority of the Commission's slamming rules took effect on April 27, 1999. The effective date of the liability rules were delayed for 90 days to enable the industry to implement a plan for an independent third party for dispute resolution and administration of the liability rules. However, the liability rules were stayed by the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit) on May 18, 1999 at the request of MCI WorldCom, Inc.

• The liability rules were at the core of the FCC's efforts to eliminate slamming by giving consumers meaningful redress. Indeed, there was a decline in slamming complaints received by the FCC (and local telephone companies reported similar declines) during the period immediately prior to the May 1999 stay that may well have been attributable to carriers' recognition that the liability rules would make it costly to continue slamming. For example:
  1. In April 1999, the FCC received 1,355 slamming complaints, compared to only 840 complaints in May 1999.
  2. SBC's records showed that in April 1999, it received 23,484 slamming complaints, compared to only 15,271 complaints in May 1999.
  3. Bell Atlantic's records revealed that in March 1999, it received 35,556 slamming complaints, but that these complaint numbers dropped to 19,263 in April 1999 and to 15,951 in May 1999.

Court Stay

• March 30, 1999 - MCI WorldCom, AT&T Corporation, the Competitive Telecommunications Association, Sprint Corporation, the Telecommunications Resellers Association, Excel Telecommunications, Frontier Corporation, and Qwest Communications Corporation filed a Joint Petition for Waiver of the Commission's liability rules.

• May 10, 1999 - MCI WorldCom filed a Motion for Stay Pending Judicial Review in the D.C. Circuit asking the court to stay the liability rules while the court decides whether they are arbitrary, capricious or otherwise unlawful.

• May 18, 1999 - The D.C. Circuit issued a stay of the Commission's liability rules pending further order of the court. This court order did not affect the other slamming rules adopted, which went into effect in April 1999. The court ordered that the case be held in abeyance and directed the parties to file motions to govern further proceedings within thirty days of the Commission's disposition of the pending petitions for reconsideration of the slamming Order. Therefore, the effective date of the liability rules was indefinitely delayed.

Slamming Complaints

• Slamming has been the single largest source of complaints to the Commission over the last several years.

• Written complaints processed by the FCC:

  1996 - 12,795
  1997 - 20,475
  1998 - 20,124
  1999 - 21,868
  2000 - 3,000 complaints in the first quarter of the year

Enforcement Actions

• Since April 1994, the Commission has:
  1. Imposed final forfeitures against eight companies for $10,321,500.
  2. Entered into consent decrees with 12 carriers with combined payments of $2,710,000.
  3. Proposed $7,640,000 in Notices of Apparent Liability (NALs) against five companies.