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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,
2001
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.
6
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
subscriber.
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
inadvertent.
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.
FEDERAL COMMUNICATIONS COMMISSION
Magalie Roman Salas
Secretary
_________________________
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
Opposition).
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
processes.
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
1541.
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 ¶
177.
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.