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Before the
FEDERAL COMMUNICATIONS COMMISSION
Washington, D.C. 20554
In the Matter of )
) File No. ENF 99-10
Vista Group International, Inc. )
) NAL/Acct. No. 916EF0005
Apparent Liability for Forfeiture )
ORDER ON RECONSIDERATION
Adopted: April 6, 2001 Released:
April 11, 2001
By the Commission:
I. INTRODUCTION
In this Order, we deny a Petition for Reconsideration
(``Petition'') filed by Vista Group International, Inc.
(``Vista''). Vista requests that the Commission review its
October 23, 2000 Order of Forfeiture,1 which imposed a forfeiture
of $680,000 against Vista for willful or repeated violations of
section 2582 of the Communications Act of 1934, as amended (the
``Act''), and our related rules and orders. In the Forfeiture
Order, the Commission found that Vista willfully or repeatedly
violated section 258 of the Act by changing the preferred
interexchange carriers (``PICs'') designated by 14 consumers
without their authorization (a practice commonly referred to as
``slamming''). In its Petition, Vista asks the Commission to
rescind the forfeiture.3
II. BACKGROUND
Between September 1, 1998 and July 30, 1999, the
Commission processed hundreds of consumer complaints regarding
Vista. Following an investigation of 18 of these complaints, the
Commission issued a Notice of Apparent Liability for Forfeiture
(``NAL'') against Vista.4 Each of the complainants contended
that Vista converted his or her preferred interexchange carrier
(``PIC'') without authorization and provided sworn statements and
evidence to that effect. Accordingly, we found that Vista was
apparently liable for a proposed forfeiture of $80,000 for each
of seven violations that appeared to involve slamming through
misleading sales and verification practices. In addition, we
found that Vista was apparently liable for a proposed forfeiture
of $40,000 for each of the other 11 instances that involved
Vista's switching consumer accounts purchased from ATS, one of
Vista's telemarketing agents.5 In total, we proposed a
forfeiture of $1,000,000.6 Vista filed a response contesting the
Commission's findings of apparent liability under section 258, as
well as the amount of the proposed forfeiture.7 In the
Forfeiture Order, we rejected most of Vista's arguments, but
found Vista not to be liable for four violations and reduced the
amount of the forfeiture by a total of $320,000 accordingly.8
On November 22, 2000, Vista filed the instant petition
for reconsideration (Petition) with the Commission. In its
Petition, Vista contends that the Commission should rescind the
remainder of the forfeiture amount because it was imposed
``against the weight of the evidence, inequitably, and arbitrary
and capriciously.''9 Generally, Vista argues that the Commission
erred by disregarding evidence describing Vista's business
practices and slamming precautions.10 Vista also claims that the
Commission applied an incorrect standard of intent by finding
Vista liable for actions wholly beyond its control.11 Vista
maintains that the Commission engaged in impermissible
retroactive rulemaking by finding violations based on the 11
consumer accounts Vista purchased from ATS, even though Vista
admits it failed to obtain authorization and verification prior
to switching the consumers' service.12 Finally, Vista argues
that the forfeiture amount is too high, and that the Commission
disregarded evidence in that regard.13
III. DISCUSSION
Reconsideration is appropriate only where the
petitioner either shows a material error or omission in the
original order or raises additional facts not known or existing
until after the petitioner's last opportunity to present such
matters.14 A petition that simply repeats arguments previously
considered and rejected will be denied.15 Our review of Vista's
Petition reveals that the Commission has already considered and
rejected some of Vista's arguments in the Forfeiture Order. We
will, therefore, limit the discussion below to those new
arguments raised by Vista.
A. Liability Assessed in the CUM Save N' Share Complaint
Vista first argues that the Commission should rescind
the penalty based on the violation described in the CUM Save N'
Share complaint. As recorded in the Vista NAL, CUM Save N' Share
filed a complaint alleging that Vista switched its PIC to Vista
without authorization.16 After reviewing the complaint and
Vista's response to the NAL, the Commission determined that Vista
did not submit adequate evidence to counter the consumer's
slamming allegation and, therefore, found that Vista had violated
the Act.17 Vista contends that in so finding, the Commission
ignored evidence demonstrating that Vista followed Commission
rules when it switched CUM Save N' Share's PIC.18 Vista was
unable to produce a tape verifying the consumer's authorization,
but did provide two declarations describing Vista's verification
practices. According to one declaration, Vista followed its
established complaint investigation procedures by contacting the
independent third party verification firm that had verified the
CUM Save `N Share authorization, Quick Response, and confirmed
that it had received ``a good verification'' for the CUM Save `N
Share account.19 The declaration from the Operations Manager of
Quick Response describes the business practices (training,
monitoring, script verification) that Quick Response used during
the time frame that it performed third party verifications on
behalf of Vista.20 Based on this description, Vista argues that
the script used during the time of the CUM Save `N Share switch
was the same as that used for the verifications of the four
accounts where the Commission determined that no unauthorized
conversion had taken place.21
As we emphasized in the Forfeiture Order, liability
must be determined on the facts and circumstances of each
individual case.22 We uphold our determination that Vista did
not provide evidence adequate to counter the complainant's
allegation that it did not authorize Vista to change its PIC.23
When we examine the declarations, we see that the one from the
Quick Response manager was very general, giving only the
procedures it purportedly used for all the verification calls,
and did not address the specific verification at issue, CUM Save
N' Share. The Vista employee reiterated Quick Response's
business practices, but also admitted that there was apparently
no verification by the complainant to change the company's PIC to
Vista.24 Thus, Vista's declarations describing its business
practices do not, in light of the complete record, persuade us
that Vista had obtained the complainant's authorization to switch
preferred carriers. We therefore find that Vista violated the
Act when it switched CUM Save N' Share's service.
Vista also argues that because Commission rules do not
require carriers to keep verification tapes, we cannot find Vista
liable for its failure to submit a tape of CUM Save N' Share.25
As discussed above, we found Vista liable, not because it failed
to produce a confirming tape, but because it failed to provide
substantive evidence to counter the complainant's allegation that
Vista changed its PIC without authorization. We therefore reject
Vista's contention.
B. Liability Assessed in the W.F. Magann Corporation and
Colorado Partnership Complaints
Vista also argues that it should not be held
responsible for the slamming violations based on the conversion
of W.F. Magann Corporation and Colorado Partnership's PICs. Vista
admits that these PIC changes were unauthorized. Magann's
preferred carrier was switched based upon ``verification'' by an
individual impersonating Ms. Ricki Bittle from Magann.26 As the
record indicates, not only was it not Ms. Bittle's voice on the
verification tape but all of the information on the tape was
incorrect, including the spelling of her name, her company's
current long-distance carrier, her company's monthly long-
distance usage, and her birthdate.27 Vista also acknowledges
that Colorado Partnership's preferred carrier should not have
been switched because the verification tape indicates that the
consumer did not agree to the switch.28 Vista argues,
nonetheless, that in both instances, Vista was unaware of these
inadequacies and had taken all the precautions it could have
under the circumstances.29 It argues that the level of
responsibility that the Commission imposes on carriers is . . .
``unrealistic and unattainable . . .''30
Vista's arguments on these issues fail. Section 217 of
the Act deems ``the act, omission or failure of any . . . person
acting for or employed by'' any carrier to be the act, omission
or failure of that carrier.31 As explained in the Forfeiture
Order, this language clearly extends to the entities ``acting
for'' Vista in securing PIC-change authorizations.32 The
verification problems encountered here indicate that Vista did
not have the consumers' authorization to make a switch in either
case. In the Magann situation, the imposter who was subsequently
recorded in a conversation with Vista's third party verifier
clearly could not have granted the initial PIC-change
authorization. Because the tape of Colorado Partnership's
``verification'' shows that the complainant did not want to
change her PIC, the complainant again could not have authorized
the PIC change. In the Forfeiture Order, the Commission found
that Vista violated the Act by changing the complainants' service
when Vista failed to obtain authorization before the verification
calls.33 The Forfeiture Order did not find that Vista had proper
authorization and then simply failed to obtain proper
verification. None of Vista's arguments persuade us that Vista
is not ultimately responsible for the unauthorized PIC changes
that occurred.
Vista also argues that it should not be found in
violation of the Act for these unauthorized conversions because
it followed the Commission's rules, and lacked intent to change
these complainants' PICs without their authorization. It
disagrees with the Commission's interpretation of the term
``willfulness'' as used in section 503(b) of the Act.34 Instead,
it offers a different interpretation from the Administrative
Procedure Act, and cites non-Commission cases in support.35 We
disagree with Vista's contention. Based on the definition of
willful in section 312(f)(1) of the Act, and the accompanying
legislative history indicating congressional intent that this
definition applies to section 503(b) as well, the Commission has
stated repeatedly that section 503(b) requires only a finding
that Vista knew it was doing the acts in question and that the
acts were not accidental.36 Furthermore, section 503(b)
authorizes the Commission to assess forfeitures for willful or
repeated violations of the Act.37 The record supports the fact
that Vista's violations were repeated, as well as being willful
under the standard imposed by the Act.
In further support of its position, Vista refers to a
Commission rulemaking report and order discussing the strict
liability standard mandated by section 258 of the Act. In
addressing carrier concerns about the imposition of the Act's
strict liability standard, the Commission stated: ``[w]e
recognize, however, that even with the greatest of care, innocent
mistakes will occur and may result in unauthorized changes. In
such cases, we will take into consideration in any enforcement
action the willfulness of the carriers involved.''38 Vista
contends that by this statement, the Commission determined that
the definition of willfulness in section 503(b) includes
consideration of intent. We reject Vista's arguments. The
statement quoted by Vista was included to assure carriers that
the Commission would apply its enforcement authority in a fair
and even-handed manner. It did not change the standards imposed
by sections 258 and 503(b) of the Act. As the Commission has
stated, section 258 ``imposes a strict liability standard on the
carrier responsible for submitting an unauthorized change,
regardless of intent.''39 The Commission determined that Congress
intended that such a ``bright line standard . . . will minimize
the threat of selective enforcement because it does not depend on
divining the subjective intent of the violator.''40 As discussed
above, Vista's actions were both willful and repeated under
section 503(b) of the Act.
C. Liability Assessed in the Remaining Complaints
In the Forfeiture Order, we found Vista apparently
liable for slamming 11 consumers whose accounts it purchased from
ATS. Vista claims that this determination constitutes an
impermissible retroactive rulemaking of proposals contained in
the Section 258 Order.41 Vista supports this argument by
reasoning that such customer base transfers were commonplace in
the telecommunications industry, the Commission was aware of
these transfers, and the Commission issued no orders assessing
liability against those carriers for switching those customers'
accounts.42 Vista reasons that because it found no waiver
requests filed until after the Section 258 Order, that order gave
notice, for the first time, that verification rules applied to
customer base acquisitions.43 Because Vista's acquisition of
customer names came before the Section 258 Order was published,
Vista claims that the Commission's Forfeiture Order against Vista
constitutes impermissible retroactive rulemaking of proposals
contained in the Section 258 Order.
We addressed similar claims in the Forfeiture Order and
are not persuaded to reverse our finding of liability here.44
First, we point out that Vista is not absolved from liability for
its actions because other carriers may have slammed consumers but
no such allegations were brought to our attention. Furthermore,
we are holding Vista liable for 11 slamming violations based on
11 consumer complaints, not for slamming all of the consumers
involved in any transfer of a customer base. In addition, the
facts in the record before us confuse the nature of the Vista/ATS
business relationship. In response to the Commission's initial
inquiries, Vista identified ATS as one of its telemarketing
agents.45 Vista additionally described these ATS consumer
accounts as having been telemarketed by ATS and ``sold to Vista
with the express or implied representation that it was properly
verified by an independent third party verification company in
accordance with federal and state law.''46 In its NAL Response,
Vista stated that ATS had acquired these consumer accounts with
the intent to provide its own telecommunications service and but
then sold the accounts to Vista.47 Regardless of the business
relationship between Vista and ATS, Vista acknowledges that it
purchased consumer accounts from ATS and subsequently submitted
PIC-change requests on behalf of those consumers to change their
service to Vista without obtaining the consumers' authorization
or verification.48
Vista's argument that it had no statutory duty to
follow the Commission's slamming rules under this type of
customer account sale until after the Section 258 Order, is
unavailing. As the Commission recently stated in a notice of
proposed rulemaking addressing the slamming waiver process:
The rules we adopted in the Section 258 Order
modified our existing requirements for the
authorization and verification of preferred
carrier changes and added procedures for handling
preferred carrier freezes. In the Section 258
Order, we also adopted liability rules designed
to take the profit out of slamming. The Section
258 Order, however, did not specifically address
carrier changes associated with the sale or
transfer of a subscriber base from one carrier to
another.49
Although Vista is correct in asserting that no carrier filed a
waiver request of the Commission's slamming rules until after the
Section 258 Order, it is not because the waiver issue was raised
there.
C. Appropriateness of Assessed Forfeiture Amount
Vista further argues that the Commission did not
consider material Vista submitted which contained financial
information supporting Vista's contention that payment of the
forfeiture amount ordered would jeopardize its ability to stay in
business.50 This material containing financial forms was not
clearly marked nor was it described in the text of the NAL
Response. Upon careful review of this material now, however,
using the same standard that it described in the Forfeiture
Order, the Commission reaffirms the amount of the forfeiture due.
In considering a carrier's claim of inability to pay, case
precedent reveals that the best indicators of a carrier's ability
to pay a forfeiture are its gross revenues,51 and that gross
revenues and current financial status can be shown in an audited
or otherwise authenticated income statement of the company.52
Here, under a request for confidentiality,53 Vista provided
federal tax returns for 1997 and 1998, audited financial
statements for those years, and two unaudited statements for the
first two quarters of 1999. In this instance, we consider the
most reliable financial information that Vista provided us54 to
be its 1998 federal tax return and audited financial statement
for that year because they were the most recent audited
information. When we look at its gross revenues as given in
those documents, we see that the proposed forfeiture amount,
$680,000, is within the range of percentage of gross revenues
that the Commission has found not excessive in other cases. 55
IV. CONCLUSION
After reviewing all the information filed by Vista in
its Petition, we find that Vista has failed to identify facts or
circumstances to persuade us that we should rescind the
Forfeiture Order, or that a further reduction of the forfeiture
amount is warranted.
V. ORDERING CLAUSES
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 Reconsideration
filed by Vista Services Corporation, Inc. IS DENIED.
IT IS FURTHER ORDERED that, pursuant to section 4(i) of
the Act, 47 U.S.C. § 154(i), Vista's Motion for Stay filed on
November 22, 2000, IS DISMISSED as moot.
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 Vista Services
Corporation SHALL FORFEIT to the United States Government the sum
of six hundred and eighty thousand dollars ($680,000) for
violating section 258 of the Act, 47 U.S.C. § 258, as well as the
Commission's rules and orders in effect from December to August,
1999 governing interexchange carrier conversions.
FEDERAL COMMUNICATIONS COMMISSION
Magalie Roman Salas
Secretary
_________________________
1 Vista Services Corporation, Order of Forfeiture, 15 FCC Rcd
20646 (2000) (Forfeiture Order). The company name in the caption
of this order has been conformed to that of the Notice of
Apparent Liability for Forfeiture in this matter.
2 Section 258 provides in pertinent part that ``no
telecommunications carrier shall submit . . . a change in a
subscriber's selection of a provider of telephone exchange
service or telephone toll service except in accordance with such
verification procedures as the Commission shall prescribe.'' 47
U.S.C. § 258. In the Notice of Apparent Liability that preceded
the Order, we also found that Vista apparently violated section
201(b) of the Act for its unreasonable marketing practices, but
declined to assess a forfeiture for those apparent violations.
3 Vista also filed a ``Motion For Stay,'' requesting that the
Commission stay the Forfeiture Order pending resolution of its
Petition. At this time, Vista has not paid the forfeiture, but
the Commission has not attempted to enforce the Forfeiture Order,
so we dismiss the motion as moot.
4 Vista Group International, Inc., Notice of Apparent
Liability for Forfeiture, 14 FCC Rcd 13814 (1999) (Vista NAL).
5 Vista NAL, 14 FCC Rcd at 13820, 13826-27. We note that in
its response to Commission inquiries Vista described ATS as a
telemarketing agent. In responding to the NAL, Vista did not
appear to contend that ATS was an agent soliciting consumers to
switch to Vista's services on Vista's behalf. Rather, Vista
stated that it purchased ``lawfully acquired customer accounts''
from ATS. See Forfeiture Order, 15 FCC at 20651. The difference
in descriptions is not material to our analysis.
6 Vista NAL, 14 FCC Rcd at 13830. 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.
7 Vista Group International, Inc., Response to Notice of
Apparent Liability, File No. ENF 99-10 (filed Sept. 30, 1999)
(NAL Response).
8 Forfeiture Order, 15 FCC Rcd at 20653.
9 Petition at 2.
10 Petition at 3-7.
11 Id. at 7-13.
12 Id. at 13-23.
13 Id. at 23-24.
14 WWIZ, Inc., 37 FCC 685, 686 (1964), aff'd sub nom. Lorain
Journal Co. v. FCC, 351 F2d 824 (D.C. Cir. 1965), cert. denied,
383 U.S. 967 (1966); 47 C.F.R. § 1.106 (b)(2).
15 Bennett Gilbert Gaines, 8 FCC Rcd 3986, 3987 (Rev. Bd.
1993).
16 Vista NAL, 14 FCC Rcd at 13826, n.66.
17 Forfeiture Order, 15 FCC Rcd at 20649, n.19.
18 Petition at 3.
19 Response to the NAL, Exhibit 6, Declaration of Stacey
Vigneau, at 5.
20 Response to the NAL, Exhibit 5, Declaration of April Reeser.
21 Petition at 3-6.
22 Forfeiture Order, 15 FCC Rcd at 20649.
23 Not only does Vista acknowledge that it has no tape
verifying that CUM Save N' Share authorized a change in service,
it admits that two of the verification tapes it has for two of
the complaints at issue (Megann Corporation and Colorado
Partnership) do not provide adequate evidence of the requisite
authorization. In fact, one of the tapes, that of Megann
Corporation, also provided by Quick Response, was apparently
falsified. See discussion, infra at 4-6. Vista did not submit
these two tapes when it submitted its NAL Response.
24 Response to the NAL, Exhibit 6, Declaration of Stacey
Vigneau, at 5-6.
25 Petition at 4.
26 Response to the NAL, Exhibit 6, Declaration of Stacey
Vigneau, at 4-5.
27 Vista NAL, 14 FCC Rcd at 13819.
28 Response to the NAL, Exhibit 6, Declaration of Stacey
Vigneau, at 7.
29 Petition at 7-10.
30 Id. at 10-11.
31 47 U.S.C. § 217 (emphasis added).
32 Forfeiture Order, 15 FCC Rcd at 20649-50.
33 Id.
34 Petition at 11.
35 Id. at 13, nn 31-34.
36 ConQuest Operator Services Corp., Order of Forfeiture, 14
FCC Rcd 12518, 12525, n.41 (1999); Target Telecom Forfeiture
Order, 13 FCC Rcd at 4458, Southern California Broadcasting Co.,
Memorandum Opinion and Order, 6 FCC Rcd 4387, 4387-88 (1991).
37 47 U.S.C. § 503(b) (emphasis added).
38 Implementation of the Subscriber Carrier Selection Changes
Provisions of the Telecommunications Act of 1996 and Policies and
Rules Concerning Unauthorized Changes of Consumers' Long Distance
Carriers, Second Report and Order and Further Notice of Proposed
Rulemaking, 14 FCC Rcd 1508, 1542 (1998) (Section 258 Order).
39 Section 258 Order, 14 FCC Rcd at 1540. See also Amer-I-Net
Service Corporation, Order of Forfeiture, 15 FCC Rcd 3118 (2000).
40 Section 258 Order, 14 FCC Rcd at 1540.
41 Petition at 22-23.
42 Id. at n. 58.
43 Id. at 20.
44 Forfeiture Order, 15 FCC Rcd at 20652.
45 Vista NAL, 14 FCC Rcd at 13821.
46 Id.
47 Response to the NAL at 39.
48 Petition at 13-14.
49 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, CC Docket No. 94-129, Third Further Notice of Proposed
Rulemaking, FCC No. 00-451 (rel. Jan. 18, 2001).
50 Petition at 24.
51 See, e.g., Target Telecom Forfeiture Order, 13 FCC Rcd at
4464 (``the 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'').
52 Long Distance Direct, Inc., Memorandum Opinion and Order, 15
FCC Rcd 3297, 3305-06 (2000).
53 Because the Commission is not describing the documents
except in general terms, we are not acting on Vista's
confidentiality request. See generally, New York Tel. Co. and
Material Enterprises Co., Request for Confidential Treatment of
Certain Financial Information, 5 FCC Rcd 874 (1990).
54 We note that the Commission has the flexibility to consider
documentation that it considers to be reliable and objective
evidence of a violator's ability to pay. See Commission's
Forfeiture Policy Statement and Amendment of Section 1.80 of the
Rules to Incorporate the Forfeiture Guidelines, Report and Order,
12 FCC Rcd 17087, 17107 (1997) (Forfeiture Policy Statement),
recon. denied, 15 FCC Rcd 303 (1999).
55 PJB Communications of Virginia, Inc., 7 FCC Rcd 2088, 2089
(1992); David L. Hollingsworth d/b/a Worland Services, 7 FCC Rcd
6640, 6641 (1992).