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Before the
Federal Communications Commission
Washington, D.C. 20554
)
In the Matter of )
Long Distance Consolidated ) File No. EB-04-TC-147
Billing Co. ) NAL/Acct.: 200732170003
Verification of Orders for ) FRN:0004337499
Telecommunications Service )
)
ORDER
Adopted: October 25, 2006 Released: October 25, 2006
By the Chief, Enforcement Bureau:
1. In this Order, we adopt the attached Consent Decree entered into
between the Enforcement Bureau of the Federal Communications Commission
("FCC" or "Commission") and Long Distance Consolidated Billing Co.
("LDCB"). The Consent Decree terminates an investigation into potential
violations by LDCB of sections 201(b) and 258 of the Communications Act of
1934, as amended ("the Act"), 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. The Enforcement Bureau and LDCB have negotiated the terms of a Consent
Decree that would resolve this matter and 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
adopting the Consent Decree and terminating the above-captioned
investigation.
4. Accordingly, IT IS ORDERED, pursuant to section 4(i) of the Act, 47
U.S.C. S 154(i), and the authority delegated by sections 0.111 and 0.311
of the Commission's rules, 47 C.F.R. SS 0.111, 0.311, that the attached
Consent Decree is ADOPTED.
5. it is furthered ordered that the above-captioned proceeding is
TERMINATED.
FEDERAL COMMUNICATIONS COMMISSION
Kris A. Monteith
Chief, Enforcement Bureau
Before the
Federal Communications Commission
Washington, D.C. 20554
)
In the Matter of )
Long Distance Consolidated ) File No. EB-04-TC-147
Billing Co. ) NAL/Acct. No.: 200732170003
Verification of Orders for ) FRN: 0004337499
Telecommunications Service )
)
CONSENT DECREE
I. INTRODUCTION
1. The Enforcement Bureau ("Bureau") of the Federal Communications
Commission (the "FCC" or "Commission") and Long Distance Consolidated
Billing Co. ("LDCB"), by their authorized representatives, hereby enter
into this Consent Decree to resolve the Bureau's investigation (the
"Investigation") 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.
II. BACKGROUND
2. The Bureau sent a letter of inquiry ("LOI") to LDCB on January 28,
2005, concerning Consumer Complaints filed with the Commission indicating
that LDCB may have submitted preferred carrier changes on behalf of
consumers without following the Commission's verification procedures. The
LOI directed LDCB, among other things, to provide information regarding
both its telemarketing and third party verification practices, as well as
copies of any complaints that LDCB received from a regulatory authority
(other than the FCC) or directly from consumers, from April 1, 2004
through January 28, 2005, alleging that the preferred carrier for a
consumer's local, intraLATA toll, or long distance services were changed
without the consumer's permission, or "slammed," after receiving a call
from LDCB or a LDCB telemarketing contractor. The LOI directed LDCB to
support its response with pertinent documentation and affidavits.
3. LDCB provided its written response on March 11, 2005, and supplemented
its response on April 12, 2005, and November 22, 2005.
III. DEFINITIONS
4. 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 releases the
Adopting Order.
d. The "FCC" or the "Commission" means the Federal Communications
Commission.
e. "Investigation" means the investigation commenced by the Bureau's
letter of inquiry dated January 28, 2005, regarding LDCB's possible
noncompliance with sections 201 and 258 of the Act and section 64.1120 of
the Commission's rules.
f. "LDCB" or "Company" means Long Distance Consolidated Billing Co., and
any affiliate, d/b/a, predecessor-in-interest, parent companies, and any
direct or indirect subsidiaries of such companies, or other affiliated
companies or businesses and their successors and assigns.
g. "Parties" means LDCB and the Bureau.
h. "Consumer Complaint" means any complaint LDCB receives directly from a
consumer or LDCB receives from a federal or state regulatory agency
alleging that LDCB has changed the consumer's preferred carrier without
authorization or that the consumer was mislead about the nature of LDCB's
services during the marketing of the services.
VI. AGREEMENT
5. LDCB agrees that the Commission and its delegated authority, the
Bureau, have jurisdiction over it and the subject matter contained in this
Consent Decree and the authority to enter into and adopt this Consent
Decree.
6. LDCB 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. LDCB
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 LDCB respectively affirm and warrant that said
representative is acting in her capacity and within her authority as a
member of LDCB, and on behalf of LDCB, and that, by her signature, said
representative is binding LDCB to the terms and conditions of this Consent
Decree.
7. 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 LDCB concerning matters that were the
subject of this Investigation, or seek on its own motion any
administrative or other penalties from LDCB 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. S 208, or to take
any action otherwise authorized by the Act. In consideration of the
termination of the Investigation, LDCB agrees to the following terms and
conditions of this Consent Decree:
8. Misleading Sales Calls. No sales representative will make a sales call
that is misleading in any material respect. For example, such calls will
not represent, suggest, or imply:
i. that the company calling the consumer is any company other than LDCB;
ii. that the purpose of the sales call is anything other than offering the
consumer
long distance service and a bill consolidating service;
iii. that the call will not result in a change of the consumer's long
distance carrier;
iv. that another carrier (or the consumer's current carrier) cannot make
or complete
certain long distance calls; or,
v. that the call is only for the purpose of verifying or confirming the
consumer's
current service.
9. Revised Scripts. LDCB will revise its sales and third party
verification (TPV) scripts
within thirty (30) calendar days of the Effective Date. The sales script
will be revised to alert the consumer that his/her long distance provider
will be changed. LDCB will revise the TPV script to elicit clearly the
consumer's approval to switch service providers.
10. Consumer Remedies. LDCB will promptly and in good faith address and
resolve all Consumer Complaints in a reasonable manner. In all cases where
LDCB concludes that misleading statements were made by a sales
representative, it will contact the consumer and provide appropriate
remedies, including assistance to the customer in returning to his
preferred carrier and reasonable credits or refunds for charges incurred
as permitted by applicable federal and state laws or regulations. Further,
LDCB will have all Consumer Complaints regarding an alleged unauthorized
switch of service providers addressed by specially-trained customer
service representatives. When a consumer calls alleging an unauthorized
preferred carrier change, the consumer will be forwarded to LDCB
representatives with special training in the subject matter. Wherever
possible, the consumer's concern will be addressed during the first call.
In those cases where it is necessary to arrange to call the consumer back
or have the consumer leave a message for that purpose, LDCB will ensure
that the consumer's call is returned by a specially-trained representative
within twenty-four (24) hours.
11. Customer Service Record Retention. LDCB will retain records of
Consumer Complaints and customer service responses, including consumer
credits, for the term of the Consent Decree. These records will be made
available to the Bureau within twenty (20) days of any request from the
Bureau.
Such Consumer Complaint records shall include all written Consumer
Complaints filed
directly with LDCB and those Consumer Complaints filed against, or
otherwise submitted to, LDCB in any local, state, or federal jurisdiction.
The record of Consumer Complaints shall include the name, address, and
telephone number of each complainant, LDCB's response, and the final
disposition of each such Consumer Complaint. For the purposes of this
provision, Consumer Complaint records shall include all writings, computer
records, electronic or e-mail communications, and all written notes
regarding such complaints. LDCB will maintain such records in an accurate
and easy-to-review format.
12. Sales Training Materials. LDCB will implement a new policy manual
("Manual") within thirty (30) calendar days of the Effective Date. The
Manual will prohibit any activity that violates any federal or state law,
misrepresents the sales caller's identity or purpose, or involves any
other false, misleading, untrue, or incomplete statements. The Manual will
impose a "zero tolerance" policy for acts of misrepresentation and
violation of the policies and requirements in the Manual, and provide that
LDCB may immediately terminate its relationship with any employee,
affiliate, agent, contractor or any other individual or entity acting on
behalf of, or for the benefit of, LDCB which violates any policy or
requirement described in the Manual. Within sixty (60) days of the
Effective Date, all existing marketing agents will be required to review
the Manual and each new marketing agent will review it as a part of his
initial training. In addition, LDCB's "zero tolerance" policy regarding
slamming and deceptive marketing practices (or any other violation of the
Manual) will be emphasized to all such sales representatives.
The activity prohibited by the Manual will include, but will not be
limited to:
i. Any activity which violates any federal or state law or results in
violation of any regulation enacted by any federal or state governmental
body including the FCC or any state public utilities commission. Any
activity which would constitute a violation of federal or state slamming
or cramming laws is strictly prohibited; and,
ii. Any act of misrepresentation or fraud made in relation to LDCB's
services, rates, surcharges, terms, and conditions. This may include, but
is not limited to, the following:
(1) claiming that a sales call is for a purpose other than to sell LDCB's
long distance services;
(2) claiming to be affiliated with or working for any telecommunications
carrier or any company other than LDCB;
(3) failing to identify adequately the marketing representative or LDCB on
a sales call; and,
(4) making any false, untrue, misleading, or incomplete statements.
13. Marketing Contracts. Any marketing contracts LDCB enters into with
sales marketing companies will require that the marketing companies agree
to abide by all applicable federal and state laws and regulations. The
marketing contracts will allow LDCB, in its sole discretion, to terminate
the contract upon any accusation, against the marketer, of illegal
conduct, including misrepresentation.
14. Counsel Review. Prior to effectuating any Manual controlling the
marketing or sale of LDCB's long distance or bill consolidation services,
or implementing changes to its sales or TPV scripts, LDCB will submit the
same to legal counsel for review and advice regarding conformity with the
requirements of the Consent Decree and all applicable federal and state
laws and regulations. Such counsel shall have experience with federal
telecommunications and consumer protection laws, including the law
relating to fraudulent, deceptive, unconscionable and unfair acts or
practices.
15. Notice of Consent Decree. Within thirty (30) calendar days of the
Effective Date, LDCB will thoroughly review the substantive requirements
and procedures set forth in the Consent Decree with its directors and
officers, and with managers, employees, agents, and persons associated
with LDCB who are responsible for implementing the obligations contained
herein. LDCB will, within thirty (30) calendar days of the Effective Date,
deliver to each of its current directors and officers, and to all
managers, employees, agents, and persons associated with the LDCB having
sales, marketing/advertising, operational or customer service
responsibility with respect to LDCB's long distance and consolidated
billing services, written instructions as to their respective
responsibilities in connection with LDCB's compliance and obligations
under this Consent Decree. LDCB will distribute such instructions to all
its future directors and officers wherever located, and to all future
managing marketing personnel.
16. Business Records Demonstrating Compliance. LDCB will maintain and make
available to the Bureau, within twenty (20) calendar days of receipt of
any request from the Bureau, business records demonstrating compliance
with the terms and provisions of the Consent Decree.
17. Term of Consent Decree. Three (3) years from the Effective Date.
18. 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 by LDCB with the
requirements of the Act or the Commission's rules and orders. The Parties
agree that this Consent Decree is for settlement purposes only and that,
by agreeing to this Consent Decree, LDCB does not admit or deny any
noncompliance, violation, or liability for violating the Act or
Commission's rules and orders in connection with the matters that are the
subject of this Consent Decree.
19. In further consideration for the termination of the Investigation in
accordance with the terms of this Consent Decree, LDCB agrees to make a
voluntary contribution to the United States Treasury, without further
protest or recourse to a trial de novo, in the amount of eighty-five
thousand dollars ($85,000.00). The payment shall be made in four equal
installments over a twelve (12) month period, that will begin on the
Effective Date. The first installment of $21,250.00 shall be made within
three (3) months of the Effective Date. The second installment of
$21,250.00 shall be made within six (6) months of the Effective Date. The
third installment of $21,250.00 shall be made within nine (9) months of
the Effective Date. The fourth and final payment of $21,250.00 shall be
made within twelve (12) months of the Effective Date. Payment must be made
by check or similar instrument, payable to the order of the Federal
Communications Commission. The payment must include the NAL/Acct. No. and
FRN No. referenced above. Payment by check or money order may be mailed to
Forfeiture Collection Section, Finance Branch, Federal Communications
Commission, P.O. Box 358340, Pittsburgh, Pennsylvania, 15251. Payment by
overnight mail may be sent to Mellon Client Service Center, 500 Ross
Street, Room 670, Pittsburgh, PA 15262-0001, Attn: FCC Module Supervisor.
Payment by wire transfer may be made to: ABA Number 043000261, receiving
bank Mellon Bank, and account number 911-6229. Please include your
NAL/Acct. No. with your wire transfer remittance.
20. LDCB 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. LDCB
agrees to notify the Chief, Telecommunications Consumers Division,
Enforcement Bureau, Federal Communications Commission, 445 12^th Street,
S.W., Washington D.C. 20554, at least thirty (30) calendar days prior to
the effective date of any material change in LDCB'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 LDCB to disclose to the Bureau "material inside
information," as that term is defined in applicable securities laws and
regulations.
21. LDCB agrees to provide a written report ("Compliance Report") to the
Bureau six (6) months from the Effective Date describing its compliance
efforts with this Consent Decree. LDCB also agrees to submit to the Bureau
additional Compliance Reports twelve (12), twenty-four (24), and
thirty-six (36) months from the Effective Date. These Compliance Reports
will also quantify the number of Consumer Complaints regarding marketing
or slamming, filed with the Commission or a state public utilities
commission, received by LDCB during the period covered by the Report. All
Compliance Reports shall be submitted to the Bureau via e-mail and U.S.
mail to the attention of the Chief, Telecommunications Consumers Division,
Enforcement Bureau, Federal Communications Commission, 445 12^th Street,
S.W., Washington, D.C. 20554.
22. LDCB'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.
23. Provided the Adopting Order adopts the Consent Decree without change,
addition, or modification, LDCB waives any and all rights it may have to
seek administrative or judicial reconsideration, review, appeal or stay,
or otherwise to challenge or contest the validity of this Consent Decree
and the Adopting Order.
24. 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.
25. 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.
26. By this Consent Decree, LDCB 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
LDCB'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.
27. 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 LDCB nor the Commission will contest the validity of the Consent
Decree or Adopting Order, and LDCB 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.
28. LDCB 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.
29. This Consent Decree may be signed in counterparts.
For the Enforcement Bureau For Long Distance Consolidated Billing Co.
By:_____________________________ By:____________________________________
Kris A. Monteith Jan Lowe
Chief, Enforcement Bureau President
Federal Communications Commission Long Distance Consolidated Billing Co.
_________________________________ ________________________________________
Date Date
47 U.S.C. SS 201(b), 258.
"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. SS 64.1100-64.1195.
LDCB's business address is 145 S. Livernois Road, Suite 199, Rochester, MI
48307. LDCB is a nationwide reseller of international, interstate, and
intrastate interexchange telecommunications services.
47 U.S.C. SS 201(b), 258; 47 C.F.R. S 64.1120.
See Letter from Colleen Heitkamp, Chief, Telecommunications Consumers
Division, Enforcement Bureau, Federal Communications Commission to Ms. Jan
M. Lowe, President, Long Distance Consolidated Billing Co. (Jan. 28,
2005).
See Letter from Thomas K. Crowe, Gregory E. Kunkle, Counsel for Long
Distance Consolidated Billing Co. to David Hunt, Attorney,
Telecommunications Consumers Division, Enforcement Bureau, Federal
Communications Commission (Mar. 11, 2005); Letter from Thomas K. Crowe,
Gregory E. Kunkle, Counsel for Long Distance Consolidated Billing Co. to
David Hunt, Attorney, Telecommunications Consumers Division, Enforcement
Bureau, Federal Communications Commission (Apr. 12, 2005); Letter from
Thomas K. Crowe, Gregory E. Kunkle, Counsel for Long Distance Consolidated
Billing Co. to Edward Hayes, Attorney, Telecommunications Consumers
Division, Enforcement Bureau, Federal Communications Commission (Nov. 22,
2005).
See supra note 3.
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Federal Communications Commission DA 06-2096