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FEDERAL COMMUNICATIONS COMMISSION
Washington, D.C. 20554
In the Matter of )
) File No. EB-00-TC-164
America's Tele-Network Corporation )
) NAL/Acct. No.
Apparent Liability for Forfeiture )
ORDER OF FORFEITURE
Adopted: December 12, 2001; Released: December 17, 2001
By the Commission:
In this Order, we assess a forfeiture of $1,020,000
against America's Tele?Network Corporation (``ATNC'') for willful
or repeated violations of the Communications Act of 1934, as
amended (the ``Act''),1 and our rules and orders.2 For the
reasons set forth below, we find that ATNC willfully or
repeatedly violated section 258 of the Act and the Commission's
rules and orders by changing the preferred carriers for 16
consumers' telephone lines without the consumers' authorization,
a practice commonly referred to as ``slamming.''
The facts and circumstances surrounding this case are
set forth in the Notice of Apparent Liability (``NAL'')
previously issued by the Commission, and need not be reiterated
at length.3 In 2000, the Commission received 263 consumer
complaints alleging slamming by ATNC. Commission staff
investigated many of these allegations, requesting additional
information from ATNC. This proceeding is based on 17 apparent
violations, represented by 16 consumer complaints. Each of the
16 complainants asserted that ATNC had converted his or her
designated preferred carrier without authorization.
Following an investigation of the above complaints,
which included an opportunity for ATNC to respond to the
allegations raised by complainants, the Commission issued the
ATNC NAL. There the Commission determined that ATNC had
apparently failed to obtain the complainants' authorization
before submitting preferred carrier change requests, in violation
of section 258 of the Act and the Commission's rules and orders
against slamming. As a result, the Commission determined that
ATNC was apparently liable for a proposed forfeiture of $40,000
for each of the 17 violations, for a forfeiture of $680,000. The
Commission proposed increasing the fine by 50% based upon ATNC's
apparent pattern of intentional and egregious misconduct, for a
total proposed forfeiture of $1,020,000.4
In its response to the ATNC NAL, ATNC does not deny
that it submitted preferred carrier change orders to the
complainants' local exchange carriers. However, ATNC contests
the Commission's determination of apparent liability and proposal
of a forfeiture penalty, as well as the amount of the forfeiture.
ATNC argues that it should not be found liable because the
Commission rejected ATNC's verification process based on
standards that were not previously defined, and that the
Commission interpreted ATNC's verification script too narrowly.5
ATNC also argues that that amount of the proposed forfeiture is
excessive because 1) the Commission erred in determining ATNC's
behavior to be apparently intentional and egregious; 2) the
Commission did not take ATNC's remedial steps into consideration;
and 3) the forfeiture amount is disproportionately higher than
that imposed on other carriers.6 We find none of ATNC's
arguments to be persuasive.
A. ATNC is Liable for Slamming
ATNC argues that the Commission based its finding of
liability on an improper rejection of ATNC's verification script.
ATNC first claims that the Commission engaged in ``hip pocket
rulemaking'' by adopting a sample verification script from a 1991
Notice of Proposed Rulemaking7 as a ``standard,'' without
observing the notice and comment period required by the
Administrative Procedure Act,8 and without taking into account
the impact on small businesses required by the Regulatory
Flexibility Act.9 We disagree.
ATNC's argument is based on a misunderstanding of the
Commission's use of the 1991 sample verification script in the
NAL.10 The ATNC NAL did not adopt the 1991 sample script as a
``standard'' by which ATNC's and all other verification scripts
would be judged. Instead, the ATNC NAL used the 1991 sample
script merely as an example of what meets the standard
established by Section 64.1150(d) of the Commission's rules,
which requires that a verification must ``include clear and
conspicuous confirmation that the subscriber has authorized a
preferred carrier change.''11 In the ATNC NAL, the Commission
recognized that the 1991 script has language that meets its
verification standard: for example, ``Did you . . . recently
receive a call asking you to select [carrier name] as your long
distance company?'' ``I'd like to confirm that you have selected
[carrier name] to carry long distance calls.''12 By contrast,
the language in ATNC's verification script at best presumes that
the customer authorized a preferred carrier change during the
sales portion of the call, and merely confirms that the customer
has the authority to make a preferred carrier change:
Thank you for choosing America's Tele-Network
as your long distance and local provider. . . . At
the tone, please say your name and address
clearly. Spell your name if necessary. Are you
authorized to choose America's Tele-Network as
your long distance and local long distance
provider? Please say ``YES'' at the tone. To
confirm your identity, at the tone please state
your Date of Birth or your mother's maiden name
Your Welcome package will be sent to you, which
will include any information you need.13
As the Commission observed in the ATNC NAL, the script
does not solicit a response from the consumer that he or she has,
in fact, selected ATNC as a preferred carrier.14 Since ATNC's
verification script does not solicit a clear and conspicuous
confirmation of a preferred carrier change, we affirm the ATNC
NAL and conclude that ATNC's script is grossly deficient in light
of the standard prescribed in our rules.15
ATNC also argues that, because the Commission did not
previously define the factors by which a verification script
would be sufficient under our the rules, the ATNC NAL engaged in
``an ex post facto punishment [of ATNC] for failure to comply
with an unannounced standard.''16 We disagree. The standard in
our rules for verifying a consumer's decision to change his or
her preferred carrier is plain on its face: a verification must
``include clear and conspicuous confirmation that the subscriber
has authorized a preferred carrier change.''17 The Commission
stated in the ATNC NAL that ATNC's verification script did not
solicit an ``unambiguous, definitive, direct response from the
consumer that he or she is confirming a request that ATNC provide
telephone service.''18 Contrary to ATNC's argument, this is not
a new ``factor'' to determine if a verification script complies
with the Commission's rules, but simply an application of the
``clear and conspicuous'' standard to ATNC's verification script.
ATNC's script simply failed to meet the standard already clearly
defined in our rules.
ATNC next claims that the Commission improperly
scrutinized each sentence in ATNC's script, thus violating ATNC's
First Amendment rights. ATNC argues that if the Commission had
looked at the verification script ``on the whole,'' it would have
found that the script contained a clear and concise verification
of a preferred carrier change.19 To the contrary, we believe
that looking at ATNC's script ``on the whole'' reveals that the
script assumes, without ever asking, that the subscriber has
already chosen ATNC as his or her long distance provider.20 This
falls far short of being ``clear and conspicuous'' that the
subscriber is actually ``confirming a request that ATNC provide
[long distance] service.''21
B. The Amount of the Forfeiture is Proper
As discussed in the ATNC NAL,22 our rules establish a
standard forfeiture amount of $40,000 for violations of our rules
and orders regarding unauthorized changes of preferred
interexchange carriers. 23 Furthermore, based on the Act, our
rules and guidelines allow an upward adjustment of the forfeiture
amount based on the particular facts and circumstances of the
violation(s).24 These include the egregiousness of the
misconduct, ability or inability to pay, whether the violation
was intentional, whether substantial harm resulted from the
violations, history of compliance with Commission requirements,
whether the violator realized substantial economic gain from the
misconduct, and whether the violation is repeated or
We find that ATNC's deficient verification script
deserves an upward adjustment of the forfeiture amount as part of
ATNC's intentional failure to follow our verification rules. As
discussed above, the company's verification script falls grossly
short of eliciting a clear and conspicuous confirmation that a
consumer wants to switch his or her preferred carrier to ATNC.26
ATNC provided this script to an independent third?party verifier
who simply followed the script to the letter. The consumer
hearing the language from the script might not understand that by
answering ``Yes'' to the authorization question, he or she had
just confirmed consent to switch to ATNC. As a result, any
misrepresentation and/or miscommunication between the consumer
and the telemarketer during the sales process would go undetected
during the verification process.27 Also, ATNC offered no
probative evidence to contradict the ATNC NAL's determination
that the company apparently intentionally violated the
verification rules.28 Accordingly, we affirm the ATNC NAL and
conclude that ATNC intentionally failed to comply with our
verification rules, thus justifying a substantial upward
adjustment of the base forfeiture amount.
ATNC also argues that it was improper for the
Commission to increase the proposed forfeiture upward because the
Commission has typically increased forfeitures only in cases
involving forged Letters of Authorization (LOAs) or evidence of
deceptive marketing practices.29 However, the fact that ATNC's
case does not involve deceptive marketing practices or forged
LOAs does not weaken the Commission's rationale for increasing
the forfeiture consistent with factors set out in the statute,
the Commission's rules, and the Forfeiture Policy Statement,
i.e., that ATNC intentionally and egregiously failed to follow
our verification rules. We therefore reject ATNC's argument in
In addition, ATNC claims that the Commission's finding
that ATNC intentionally failed to verify the authorizations has
no support in the record, particularly given the fact that ATNC
obtained taped third party verifications.30 We do not agree that
ATNC's taped ``authorizations'' reflect that ATNC made good faith
efforts to comply with our rules. On the contrary, the tapes
ATNC provided to the Commission merely underscored the confusion
inherent in its defective verification process. As outlined in
the ATNC NAL, none of the 13 tapes that ATNC submitted to
Commission staff included the introduction thanking the customer
for selecting ATNC.31 Also, two of the tapes indicate customer
confusion regarding the question ``are you authorized to select''
ATNC. 32 Accordingly, we find that ATNC's taped
``authorizations'' do not mitigate the intentional nature of
ATNC further asserts that in situations similar to its
case, where deficiencies were found in the verification process,
the Commission did not increase the forfeiture.33 However, the
facts of ATNC's case are different from the two cases it cites.
Neither Minimum Rate Pricing, Inc.34 nor Long Distance Direct,
Inc.35 involved a grossly deficient verification script like the
one ATNC designed. The MRP proceeding involved a carrier's
failure to secure an LOA prior to changing a consumer's preferred
long-distance carrier, as well as tariff provisions that enabled
the carrier to engage in slamming.36 LDDI involved consumers
being switched to an unauthorized long-distance carrier and
incurring unauthorized charges after the consumers called The
Psychic Friends Network (a joint marketing partner with the
unauthorized long-distance carrier).37 Because the details of
the violations in these two cases are different from those in
ATNC's case, it is unreasonable to expect the Commission to
handle the forfeitures in the same way.
ATNC also argues that we should decrease the forfeiture
because of the remedial steps it has taken to address its
unauthorized preferred carrier changes, and because it ceased
marketing activities as of October, 2000 to reassess its
procedures.38 We disagree. As the Commission has previously
found,39 ATNC's remedial steps, such as training and monitoring
telemarketing employees, and instituting a validation
department,40 are not unusual for the industry.41 Furthermore,
ATNC's cessation of telemarketing activities came months after
the Consumer Information Bureau had forwarded over 200 informal
consumer complaints to ATNC for its response. Thus, as the
Commission found in the Coleman Forfeiture, 42 we find no basis
for reducing the forfeiture amount on these grounds.
Finally, ATNC asserts that the ATNC NAL fails to take
into account ATNC's gross revenues as representative of its
ability to pay, as compared to larger carriers.43 In particular,
ATNC asserts that the Commission proposes a much higher ``per-
slam'' forfeiture for ATNC than it proposed for AT&T and Qwest in
other slamming cases.44 We disagree with ATNC's analysis.
First, to the extent the Commission's investigation found more
egregious violations by ATNC than other carriers, it would be
unreasonable for us to change the total forfeiture amount just
because it is disproportionate compared to other Commission
orders.45 Furthermore, we observe that the proposed upward
adjustment per egregious violation was actually greater in the
AT&T NAL and Qwest NAL than in the ATNC NAL. In both the AT&T
NAL and Qwest NAL, the Commission proposed adjusting the
forfeiture amount for the egregious violations (involving
forgery) to $80,000 per violation (a 100% increase), and proposed
the $40,000 base slamming forfeiture amount for the remaining
violations.46 In the ATNC NAL, by comparison, the Commission
proposed increasing the forfeiture amount for ATNC's egregious
violations by only 50%, for a total forfeiture of $1,020,000 for
17 violations, or $60,000 per violation.47 Hence, for ATNC's
egregious violations, the Commission proposed a smaller
forfeiture amount per violation than it proposed for AT&T and
Qwest. It just so happens that, unlike in the AT&T NAL and Qwest
NAL, all of ATNC's violations were found to be egregious.
Finally, although ATNC correctly asserts that smaller carriers'
gross revenues should be taken into account in determining the
total forfeiture amount,48 it has not produced any evidence that
it will not be able to pay the total forfeiture proposed in the
ATNC NAL. Accordingly, we find no basis for reducing the total
After reviewing the information filed by ATNC in its
Response, we find that ATNC has failed to identify facts or
circumstances to persuade us that there is any basis for
reconsidering the ATNC NAL. Further, ATNC has not shown any
mitigating circumstances sufficient to warrant a reduction of the
V. ORDERING CLAUSES
Accordingly, IT IS 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 ATNC
Communications, Inc. SHALL FORFEIT to the United States
Government the sum of $1,020,000 for violating section 258 of the
Act, 47 U.S.C. § 258, as well as the Commission's rules and
orders governing preferred carrier conversions.49
IT IS FURTHER ORDERED that a copy of this Order of
Forfeiture shall be sent by certified United States mail to
America's Tele-Network Corporation, in care of Charles H. Helein,
Esq., The Helein Law Group, P.C., 8180 Greensboro Drive, Suite
700, McLean, Virginia 22102, and to John W. Little, President,
America's Tele-Network Corporation, 720 Hembree Place, Roswell,
FEDERAL COMMUNICATIONS COMMISSION
Magalie Roman Salas
1 Section 258 states 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.
2 47 C.F.R. §§ 64.1100, 64.1150. Sections 64.1100 and 64.1150
are now codified at section 64.1120 of the Commission's rules.
65 FR 47678, 47690 (2000). Because the apparent violations
occurred prior to November 28, 2000, the effective date of the
revised rules, sections 64.1100 and 64.1150 were the applicable
Commission rules in effect during the relevant time period. See
also 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 (1998) (Section 258 Order); Further
Notice of Proposed Rulemaking and Memorandum Opinion and Order on
Reconsideration, 12 FCC Rcd 10674 (1997).
3 In the Matter of America's Tele-Network Corp., Notice of
Apparent Liability for Forfeiture and Order, 16 FCC Rcd 5788
(2001) (ATNC NAL).
4 ATNC NAL, 16 FCC Rcd at 5788-89.
5 Response at 2-7.
6 Response at 8-12.
7 See In the Matter of AT&T, Notice of Proposed Rulemaking, 6
FCC Rcd 1689 (1991) (1991 NPRM).
8 Response at 2-5.
9 Response at 2-3, 4-5.
10 The 1991 sample verification script referenced in the ATNC
NAL was part of a settlement proposal between AT&T and MCI. The
Commission tentatively concluded that the settlement proposal
represented a reasonable method for resolving the problem of
unauthorized changes in long distance providers. 1991 NPRM, 6
FCC Rcd at 1691. ATNC is correct that the Commission eventually
adopted the verification procedures from the 1991 NPRM without
specifically adopting the sample script as a standard. Response
at 3-4. See also In the Matter of Policies and Rules Concerning
Changing Long Distance Carriers, Report and Order, 7 FCC Rcd
1038, 1045 (1992).
11 47 C.F.R. § 64.1150(d).
12 ATNC NAL, 16 FCC Rcd at 5795.
13 ATNC NAL, 16 FCC Rcd at 5794. The full text of the script
is contained in the ATNC NAL. Id.
14 ATNC NAL, 16 FCC Rcd at 5795-96.
15 ATNC NAL, 16 FCC Rcd at 5795-96.
16 Response at 5-6.
17 47 C.F.R. § 64.1150(d).
18 ATNC NAL, 16 FCC Rcd at 5795-96.
19 Response at 6-7.
20 See, supra, text accompanying note 13.
21 See ATNC NAL, 16 FCC Rcd at 5795-96.
22 See ATNC NAL, 16 FCC Rcd at 5797-98.
23 47 CFR § 1.80(b)(4).
24 See 47 U.S.C. § 503(b)(2)(D). See also The Commission's
Forfeiture Policy Statement and Amendment of Section 1.80 of the
Commission's Rules, 12 FCC Rcd 17087, 17100-01 (1997) (Forfeiture
Policy Statement); recon denied 15 FCC Rcd 303 (1999). As
provided by the Commission's rules, the Commission and its staff
retain the discretion to issue a higher or lower forfeiture, as
permitted by statute. See 47 C.F.R. § 1.80(b)(4).
25 See 47 C.F.R. § 1.80(b)(4).
26 See, supra, text accompanying note 21.
27 At least one ATNC telemarketer claimed to be sending a
consumer a $100 check, courtesy of AT&T, as compensation for over
billing. See ATNC NAL, 16 FCC Rcd at 5790.
28 See ATNC NAL, 16 FCC Rcd at 5798-99.
29 Response at 8-9.
30 Response at 10.
31 See, supra, text accompanying note 13.
32 ATNC NAL, 16 FCC Rcd at 5794. The ATNC NAL gives more
details on these and other points of customer confusion in ATNC's
verification process. Id.
33 Response at 9-10.
34 In the Matter of Minimum Rate Pricing, Inc., Notice of
Apparent Liability, 12 FCC Rcd 17,638 (1997) (MRP NAL). See also,
In the Matter of Minimum Rate Pricing, Inc., Order Adopting
Consent Decree, 13 FCC Rcd 24,525 (1998).
35 In the Matter of Long Distance Direct, Inc., Memorandum
Opinion and Order, 15 FCC Rcd 3297 (2000) (LDDI MO&O).
36 MRP NAL, 12 FCC Rcd at 17,644-45.
37 LDDI MO&O, 15 FCC Rcd at 3298-99.
38 Response at 10.
39 See In the Matter of Coleman Enterprises, Inc. d/b/a Local
Long Distance, Inc., Order of Forfeiture, 15 FCC Rcd 24,385,
24,388 (2000) (Coleman Forfeiture) (finding remedial steps to
address unauthorized preferred carrier changes and cessation of
telemarketing services insufficient to reduce forfeiture).
40 In addition, ATNC has revised its telemarketing scripts to
eliminate possible confusion, and has terminated problem
telemarketing employees. Response at 10.
41 Coleman Forfeiture, 15 FCC Rcd at 24,388.
42 Coleman Forfeiture, 15 FCC Rcd at 24,388.
43 Response at 11.
44 Response at 11-12. ATNC compares the proposed $1,020,000
forfeiture against it for 17 unauthorized switches with a
$640,000 proposed forfeiture against AT&T for 14 unauthorized
switches, and a $2,080,000 proposed forfeiture against Qwest for
30 unauthorized switches. See In the Matter of AT&T
Communications, Inc., Notice of Apparent Liability, 16 FCC Rcd
438 (2000) (AT&T NAL); In the Matter of Qwest Communications
International, Notice of Apparent Liability, 14 FCC Rcd 18202
(1999) (Qwest NAL).
45 See In the Matter of Amer-I-Net Services Corporation, Order
of Forfeiture, 15 FCC Rcd 3118, 3122-23 (2000) (rejecting the
argument that a forfeiture fine should be reduced because it is
disproportionate compared to other Commission orders).
46 The proposed $640,000 total forfeiture against AT&T
consisted of $80,000 for each of the 2 egregious violations, and
$40,000 for each of the 12 remaining violations. See AT&T NAL,
16 FCC Rcd at 452. The proposed $2,080,000 total forfeiture
against Qwest consisted of $80,000 for each of the 22 egregious
violations, and $40,000 for each of the 8 remaining violations.
Qwest NAL, 14 FCC Rcd at 18215-16.
47 ATNC NAL, 16 FCC Rcd at 5798-99.
48 Response at 11-12.
49 The forfeiture amount should be paid by check or money order
drawn to the order of the Federal Communications Commission.
ATNC should include the reference ``NAL/Acct. No. 200132170016''
on America's Tele?Network Corporation's check or money order.
Such remittance must be mailed to Forfeiture Collection Section,
Finance Branch, Federal Communications Commission, P.O. Box.
73482, Chicago, Illinois 60673-7482. Requests for full payment
under an installment plan should be sent to: Chief, Credit and
Debt Management Center, 445 12th Street, S.W., Washington, D.C.
20554. See 47 C.F.R. § 1.1914.