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Before the
Federal Communications Commission
Washington, D.C. 20554
In the Matter of )
) File No. EB-03-TC-075
LCR Telecommunications, LLC ) NAL/Acct. No.: 200532170002
) FRN: 0004981361
Verification of Orders for )
Telecommunications Service )
ORDER
Adopted: November 29, 2004 Released: December 1,
2004
By the Chief, Enforcement Bureau:
1. In this Order, we terminate an investigation into
potential violations by LCR Telecommunications, LLC (``LCR'') of
sections 201(b) and 258 of the Communications Act of 1934, as
amended (``the Act''),1 as well as Commission rules and orders,
in connection with changing the designated preferred carrier of
consumers without their authorization and verification, a
practice commonly known as ``slamming.''2
2. The Enforcement Bureau and LCR have negotiated the
terms of a Consent Decree that would terminate the Bureau's
investigation. A copy of the Consent Decree is attached hereto
and is incorporated by reference.
3. We have reviewed the terms of the Consent Decree and
evaluated the facts before us. We find that the public interest
would be served by approving the Consent Decree and terminating
the captioned investigation.
4. Accordingly, IT IS ORDERED, pursuant to section 4(i) of
the Act, 47 U.S.C. § 154(i), and the authority delegated by
sections 0.111 and 0.311 of the Commission's rules, 47 C.F.R. §§
0.111, 0.311, that the attached Consent Decree is ADOPTED.
5. IT IS FURTHERED ORDERED that the above captioned
proceeding is TERMINATED.
FEDERAL COMMUNICAITONS COMMISSION
David H. Solomon
Chief, Enforcement Bureau
Before the
Federal Communications Commission
Washington, D.C. 20554
In the Matter of )
) File No. EB-TC-075
LCR Telecommunications, LLC ) NAL/Acct. No.: 200532170002
) FRN: 0004981361
Verification of Orders for )
Telecommunications Service )
CONSENT DECREE
I. INTRODUCTION
1. The Enforcement Bureau (``Bureau'') of the Federal
Communications Commission (the ``FCC'' or ``Commission'') and LCR
Telecommunications, LLC (``LCR''),3 by their authorized
representatives, hereby enter into this Consent Decree to resolve
an investigation by the Bureau regarding possible non-compliance
with the requirements of sections 201(b) and 258 of the
Communications Act of 1934, as amended, (the ``Act''), and
section 64.1120 of the Commission's rules.4
2. The Bureau initiated this investigation based on
consumer complaints filed with the Commission and numerous state
agencies.5 A review of the complaints indicated that LCR may
have submitted preferred carrier changes on behalf of consumers
without following the Commission's verification procedures.
Specifically, it appears that LCR's telemarketing agents may have
submitted preferred carrier changes affecting 18 subscribers by
facilitating fraudulent verification recordings. The Bureau
inquired about these practices in Letters of Inquiry issued to
LCR,6 and LCR responded to these inquiries.7
II. DEFINITIONS
3. For purposes of this Consent Decree, the following
definitions shall apply:
a. ``Adopting Order'' means an Order of the Bureau
adopting the terms and conditions of this Consent
Decree without change, addition, or modification,
and formally terminating the above-captioned
Investigation.
b. ``Bureau'' means the Enforcement Bureau of the Federal
Communications Commission.
c. ``Effective Date'' means the date on which the Bureau
adopts the Adopting Order.
d. The "FCC" or the "Commission" means the Federal
Communications Commission and all Bureaus and
Offices of the Commission, including the Enforcement
Bureau.
e. ``Investigation'' means the investigation commenced by
the Bureau's Letter of Inquiry dated February 17,
2004,8 together with slamming complaints received by
the Commission prior to the Effective Date.
f. ``LCR'' or the ``Company'' means LCR
Telecommunications, LLC, and its subsidiaries.
g. ``Marketing'' means to attempt to sell intraLATA toll,
interLATA, or international telecommunications
services through means such as telemarketing, direct
mail marketing, selling through field sales
representatives, multi-level marketing arrangements,
or the equivalent.
h. ``Parties'' mean LCR and the Bureau.
III. AGREEMENT
4. LCR agrees that the Bureau has jurisdiction over it and
the subject matter contained in this Consent Decree and the
authority to enter into and adopt this Consent Decree.
5. LCR represents and warrants that it is the properly
named party to this Consent Decree and is solvent and has
sufficient funds available to meet fully all financial and other
obligations set forth herein. LCR further represents and
warrants that it has caused this Consent Decree to be executed by
its authorized representative as a true act and deed, as of the
date affixed next to said representative's signature. Said
representative and LCR respectively affirm and warrant that said
representative is acting in his/her capacity and within his/her
authority as a member of LCR, and on behalf of LCR, and that, by
his/her signature, said representative is binding LCR to the
terms and conditions of this Consent Decree.
6. The Parties agree and acknowledge that this Consent
Decree shall constitute a final settlement of the Investigation.
In express reliance on the covenants and representations
contained herein, and in order to avoid the potential expenditure
of additional public resources, the Bureau agrees to terminate
the Investigation. The Bureau agrees that, in the absence of new
material evidence, it will not initiate on its own motion any
other enforcement action against LCR concerning matters that were
the subject of this Investigation, or seek on its own motion any
administrative or other penalties from LCR based on this
Investigation. Consistent with the foregoing, nothing in this
Consent Decree limits the Commission's authority to consider and
adjudicate any complaint that may be filed pursuant to section
208 of the Act, 47 U.S.C. § 208, and to take any action otherwise
authorized by the Act.
7. The Parties agree that this Consent Decree does not
constitute either an adjudication on the merits or a factual or
legal finding or determination regarding any compliance or non-
compliance with the requirements of the Act and Commission rules.
The Parties agree that this Consent Decree is for settlement
purposes only and that by agreeing to this Consent Decree LCR
does not admit or deny liability for violating the Act and
Commission rules in connection with the matters that are the
subject of this Consent Decree.
8. In consideration for the termination of the
Investigation in accordance with the terms of this Consent
Decree, LCR shall make a voluntary contribution to the United
States Treasury, without further protest or recourse to a trial
de novo, in the amount of five hundred thousand dollars
($500,000.00). The payment shall be made within thirty (30)
calendar days of the Effective Date. The payment shall be made
by check, wire transfer, or money order drawn to the order of
Federal Communications Commission, and the check, wire transfer,
or money order shall refer to the NAL Acct. No. and FRN No.
identified above. If LCR makes this payment by check or money
order, it must mail the check or money order to: Forfeiture
Collection Section, Finance Branch, Federal Communications
Commission, P.O. Box 73482, Chicago, IL, 60673-7482. Payment by
overnight mail may be sent to Bank One/LB 73482, 525 West Monroe,
8th Floor Mailroom, Chicago, IL 60661. If LCR chooses to make
these payments by wire transfer, payment may be made to ABA
Number 071000013, receiving bank Bank One, and account number
1165259.
9. LCR agrees that, to the extent that it has not already
done so, the Company will cease marketing to existing and
prospective customers. LCR further agrees that should it choose
to discontinue interLATA, intraLATA toll, or international
telecommunications services, the Company will file timely
applications with the Commission pursuant to section 214 of the
Act, 47 U.S.C. § 214, and section 63.71 of the Commission's
rules, 47 C.F.R. § 63.71, and all relevant state authorities.
LCR agrees to notify the Bureau via e-mail and US mail to the
attention of the Chief, Telecommunications Consumers Division,
Enforcement Bureau, Federal Communications Commission,
Washington, D.C. 20554, within ten (10) days prior to submitting
any application, registration or request to the Commission
pursuant to section 214 of the Act or section 63.71 of the
Commission's rules. For a period of two years from the Effective
Date, the Company's officers and principals9 shall not have an
ownership stake or be principals or officers in any company,
other than LCR, which sells, offers, or provides interLATA,
intraLATA toll, or international telecommunications services.
10. LCR represents and warrants that it shall not effect
any change in its form of doing business or its organizational
identity or participate directly or indirectly in any activity to
form a separate entity or corporation for the purpose of engaging
in acts prohibited in this Consent Decree or for any other
purpose which would otherwise circumvent any part of this Consent
Decree or the obligations of this Consent Decree. LCR agrees to
notify the Chief, Telecommunications Consumers Division,
Enforcement Bureau, Federal Communications Commission, Washington
D.C. 20554, at least thirty (30) days prior to the effective date
of any material change in LCR's legal status or corporate
structure, including but not limited to any merger,
incorporation, dissolution, assignment, or transfer of its
subscriber/customer base. Nothing in this Consent Decree shall
be deemed to be an obligation by LCR to disclose to the Bureau
``material inside information,'' as that term is defined in
applicable securities laws and regulations.
11. LCR agrees to provide a written report (``Compliance
Report'') to the Bureau six (6) months from the Effective Date
describing its compliance with this Consent Decree. The
Compliance Report shall provide the number of accounts or lines
billed by LCR on a monthly basis for the six month period covered
by the Compliance Report. LCR also agrees to submit to the
Bureau additional Compliance Reports twelve (12) and twenty-four
(24) months from the Effective Date. All Compliance Reports
shall be submitted to the Bureau via e-mail and US mail to the
attention of the Chief, Telecommunications Consumers Division,
Enforcement Bureau, Federal Communications Commission,
Washington, D.C. 20554.
12. LCR agrees to maintain and make available to the
Bureau, within 20 business days of receipt of any written request
from the Bureau, business records demonstrating compliance with
the terms and provisions of this Consent Decree.
13. LCR waives any and all rights it may have to seek
administrative or judicial reconsideration, review, appeal or
stay, or to otherwise challenge or contest the validity of this
Consent Decree and the Adopting Order, provided the Adopting
Order adopts the Consent Decree without change, addition, or
modification.
14. LCR's agreement to enter into this Consent Decree is
expressly contingent upon the issuance of an Order by the Bureau
that is consistent with this Consent Decree, and which adopts the
Consent Decree without change, addition, or modification.
15. In the event that any court of competent jurisdiction
renders this Consent Decree invalid, it shall become null and
void and may not be used in any manner in any legal proceeding.
16. The Parties agree that if any provision of the Consent
Decree conflicts with any subsequent rule or order adopted by the
Commission, where compliance with the provision would result in a
violation, that provision will be superseded by such Commission
rule or order.
17. By this Consent Decree, LCR does not waive or alter its
right to assert and seek protection from disclosure of any
privileged or otherwise confidential and protected documents and
information, or to seek appropriate safeguards of confidentiality
for any competitively sensitive or proprietary information. The
status of materials prepared for, reviews made and discussions
held in the preparation for, and implementation of LCR's
compliance efforts under this Consent Decree, which would
otherwise be privileged or confidential, are not altered by the
execution or implementation of the terms of this Consent Decree,
and no waiver of such privileges is made by this Consent Decree.
18. If either party (or the United States on behalf of the
Commission) brings a judicial action to enforce the terms of the
Adopting Order, neither LCR nor the Commission will contest the
validity of the Consent Decree or Adopting Order, and LCR and the
Commission will waive any statutory right to a trial de novo with
respect to any matter upon which the Adopting Order is based, and
shall consent to a judgment incorporating the terms of this
Consent Decree.
19. LCR agrees that any violation of the Consent Decree or
the Adopting Order will constitute a separate violation of a
Commission order, entitling the Commission to exercise any rights
or remedies attendant to the enforcement of a Commission order.
20. This Consent Decree may be signed in counterparts.
For the Enforcement Bureau For LCR
Telecommunications, LLC
By:_____________________________
By:____________________________________
David H. Solomon Martin J. Tibbitts,
Chief, Enforcement Bureau Managing
Member
Federal Communications Commission LCR
Telecommunications, LLC
______________________________
________________________________________
Date Date
_________________________
1 47 U.S.C. §§ 201(b), 258.
2 ``Slamming'' refers to the submission or execution of a change
in a subscriber's selection of a telecommunications service
provider without following the Commission's authorization and
verification rules. See generally 47 C.F.R. §§ 64.1100-64.1195.
3LCR's business address is 100 West Big Beaver Road, Suite 200,
Troy, MI 48084. LCR is a nationwide reseller of international,
interstate, and intrastate interexchange telecommunications 1+,
10-10-xxxx, and 1-800 services.
447 U.S.C. §§ 201(b), 258; 47 C.F.R. § 64.1120.
5Agencies in the following states participated in this
investigation: Arizona, Arkansas, California, Colorado, Delaware,
Florida, Illinois, Indiana, Iowa, Maine, Missouri, Minnesota, New
Jersey, New Mexico, Ohio, Pennsylvania, Texas, Vermont, Virginia,
and Washington.
6See Letter from Kurt Schroeder, Deputy Chief, Telecommunications
Consumers Division, Enforcement Bureau, Federal Communications
Commission to Martin Tibbitts, Managing Member, LCR
Telecommunications, LLC (Feb. 17, 2004); Letter from Colleen
Heitkamp, Chief, Telecommunications Consumers Division,
Enforcement Bureau, Federal Communications Commission to Martin
Tibbitts, Managing Member, LCR Telecommunications, LLC (July 30,
2004).
7See Letter from Thomas K. Crowe, Gregory E. Kunkle, Counsel for
LCR Telecommunications, LLC to Edward Hayes, Telecommunications
Consumers Division, Enforcement Bureau, Federal Communications
Commission (Apr. 1, 2004); Letter from Thomas K. Crowe, Gregory
E. Kunkle, Counsel for LCR Telecommunications, LLC to Edward
Hayes, Telecommunications Consumers Division, Enforcement Bureau,
Federal Communications Commission (Aug. 31, 2004).
8See supra note 4.
9See E-mail from David Hepp, Director of Customer Service, LCR
Telecommunications, LLC to Sharon Lee, Telecommunications
Consumers Division, Enforcement Bureau, Federal Communications
Division (Nov. 9, 2004) (listing all current officers,
principals, and owners of LCR).