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Before the
Federal Communications Commission
Washington, DC 20554
)
In the Matter of ) File No.: EB-TCD-12-00000420
LDC Telecommunications, Inc. ) NAL/Acct. No.: 201232170010
Apparent Liability for Forfeiture ) FRN: 0004337556
)
Notice of apparent liability for forfeiture
Adopted: August 30, 2012 Released: August 30, 2012
By the Commission: Commissioner Pai approving in part, dissenting in part
and issuing a statement.
I. introduction
1. In this Notice of Apparent Liability for Forfeiture (NAL), we find
that LDC Telecommunications, Inc. (LDC or Company) apparently
willfully and repeatedly violated Section 258 of the Communications
Act of 1934, as amended (Communications Act or Act), and Sections
64.1120 and 64.1150 of the Commission's rules. As discussed in detail
below, we find that LDC has apparently changed the preferred carriers
of 27 consumers without proper authorization, a practice commonly
known as "slamming," and has apparently failed to respond to seven
slamming complaints. Based upon our review of the facts and
circumstances surrounding these apparent violations, we propose a
monetary forfeiture of one million, one hundred eight thousand dollars
($1,108,000) against LDC for the apparent violations.
II. BACKGROUND
2. The Enforcement Bureau (Bureau) initiated an investigation of LDC
after reviewing numerous complaints from consumers alleging they had
been slammed by LDC or charged by LDC for service they did not
authorize. Most complaints were filed with the Commission and
processed through the Consumer & Governmental Affairs Bureau (CGB).
CGB generally notifies carriers of individual consumer slamming
complaints by sending a copy of the complaint to the carrier and
directing it to respond to the allegations and provide evidence of an
authorized change in a subscriber's selection of a telecommunications
service provider. After reviewing the carrier's response to the
complaint, CGB then rules on whether the carrier violated the
Commission's anti-slamming rules. CGB sent LDC 44 slamming complaints
between January 2008 and March 2012. LDC failed to respond to all but
five of the 44 complaints. With respect to the 39 complaints to which
LDC failed to respond, CGB issued orders granting the complaints and
finding that LDC's actions resulted in a "slam," i.e., unauthorized
switch in the Complainants' telecommunications service providers. For
the five complaints to which LDC did respond, CGB determined that LDC
failed to provide evidence of an authorized carrier change and issued
orders granting the complaints.
3. As part of its investigation, the Enforcement Bureau sent LDC a letter
of inquiry (LOI) on October 13, 2011, which ordered LDC to provide
certain information and documents relating to potential violations of
the Commission's carrier change rules. LDC did not respond.
Accordingly, on January 18, 2012, the Bureau issued an NAL against LDC
for violating a Bureau order. Nearly three months and numerous filings
later, LDC ultimately responded to the Bureau's LOI.
III. discussion
A. Apparent Violations of Section 258 of the Act and Sections
64.1120 and 64.1150 of the Commission's Rules
4. Section 258 of the Act prohibits the practice of "slamming," the
submission or execution of an unauthorized change in a subscriber's
selection of a provider of telephone exchange service or telephone
toll service (the subscriber's "preferred carrier"). Section 258 of
the Act makes it unlawful for any telecommunications carrier to
"submit or execute 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."
5. In accordance with Section 258, Section 64.1120(a) of the Commission's
rules provides that no carrier "shall submit a change on the behalf of
a subscriber . . . prior to obtaining: (i) Authorization from the
subscriber, and (ii) Verification of that authorization in accordance
with the procedures prescribed in this section." Specifically, a
carrier must: (1) obtain the subscriber's written or electronically
signed authorization in a format that meets the requirements of
Section 64.1130; (2) obtain confirmation from the subscriber via a
toll-free number provided exclusively for the purpose of confirming
orders electronically; or (3) utilize an independent third party to
verify the subscriber's order.
6. For third party verification, the Commission's rules require that the
verification method confirm the following: the identity of the
subscriber; that the person on the call is authorized to make the
carrier change; that the person on the call wants to make the change;
the names of the carriers affected by the change; the telephone
numbers to be switched; and the types of service involved. In
addition, Section 64.1120(c)(3)(iii) of the Commission's rules
prohibits the third party verification from including any "misleading
description of the transaction . . . ." This rule specifically states
that the third party verification must elicit, among other things,
"confirmation that the person on the call understands that a carrier
change, not an upgrade to existing service, bill consolidation, or any
other misleading description of the transaction, is being authorized."
Carriers must keep audio records of the verification for a minimum of
two years.
7. Each of the 27 consumers who filed the complaints that form the basis
of this NAL contends that LDC changed their preferred carriers or
charged them for service without authorization.
8. In response to the Bureau's LOI, LDC provided three third party
verification (TPV) recordings purportedly showing that those three
complainants had authorized service with LDC. We have reviewed the
three TPVs and find that LDC's verifier did not confirm that the
consumer wanted to switch carriers and did not confirm the telephone
number that the consumers wanted to switch as required by our rules;
rather LDC's verifier simply told the consumers that they would be
"receiving one bill from [their] local phone company[ies] being billed
on behalf of LDC Telecom as [their] long distance billing service
provider."
9. The requirement to confirm that a consumer wishes to make a carrier
change is crucial to ensure that there is no confusion or ambiguity
about the fact that the consumer is changing carriers, particularly in
the instant case where consumers contend they did not intend to change
carriers at all. LDC's verifier stated that the call was being
recorded "for accuracy and quality assurance" and suggested that LDC
was going to be the complainants' "long distance billing service
provider." These statements do not in any way alert consumers that
they are agreeing to a carrier change and, in fact, suggest instead
that LDC is simply providing a billing service. Therefore consumers
are likely to be unaware that they will have a new long distance
service provider until they receive their telephone bills.
10. With respect to the other 24 consumers whose complaints form the basis
of this NAL, LDC provided no verification tapes or other evidence of
authorization to change their preferred carriers. Thus, we presume
these 24 complaints to be unauthorized changes in consumers'
telecommunications service providers.
11. We also note that consumers who received bills with LDC charges and
realized they had been slammed were further inconvenienced by the
necessity to contact LDC to try and negotiate a refund and contact
their previous carrier to have their services switched back. Most
consumers complain of the poor customer service they received when
they called LDC or LDC's billing aggregator, ILD Teleservices, Inc.,
to cancel the service. Some complainants stated that LDC simply does
not return their phone calls. For example, one complainant explained
that he "[t]ried to contact LDC [but that] they have an `answering
service' which either hangs up immediately or transfers call to some
bogus number/company. No LDC personnel willing to take call or call
back." Others complained that LDC would not provide adequate refunds
and instructed them to file a complaint with the FCC. For example,
according to one consumer: "I told [LDC] that we never authorized this
and I wanted a full credit refunded back to me for the whole time they
charged us. They told me that a supervisor would have to get back with
me. I never heard back from the supervisor so I called back . . . .
They informed me that a supervisor could only credit me with 50% on
the last bill or I could just file a complaint with the FCC." The
consumer harm could be substantial; one complainant stated that LDC
charged him $259.51 in March 2012 and $371.14 in April 2012, but
refused to issue any refunds and instead instructed him to file a
complaint with the FCC or the Better Business Bureau.
12. We conclude that LDC apparently willfully and repeatedly violated
Section 258 of the Act and Section 64.1120 of the Commission's rules
by submitting carrier change orders without proper authorization for
each of the 27 consumers listed in the Appendix. We further find that
LDC apparently willfully and repeatedly violated Section 64.1150(d) of
the Commission's rules by failing to respond to slamming complaints
CGB sent to LDC. We therefore propose a forfeiture for these apparent
willful and repeated violations.
A. Proposed Forfeiture Amount
13. Section 503(b)(1) of the Act states that any person who willfully or
repeatedly fails to comply with any provision of the Act or any rule,
regulation, or order issued by the Commission, shall be liable to the
United States for a forfeiture penalty. Section 503(b)(2)(B) of the
Act authorizes the Commission to assess a forfeiture of up to $150,000
for each violation by a common carrier, or each day of a continuing
violation, up to a statutory maximum of $1,500,000 for a single act or
failure to act. The Commission may assess this penalty if it
determines that the carrier's noncompliance is "willful or repeated."
For a violation to be willful, it need not be intentional. In
exercising our forfeiture authority, we are required to take into
account "the nature, circumstances, extent, and gravity of the
violation and, with respect to the violator, the degree of
culpability, any history of prior offenses, ability to pay, and such
other matters as justice may require." In addition, the Commission has
established guidelines for forfeiture amounts and, where there is no
specific base amount for a violation, retained discretion to set an
amount on a case-by-case basis.
14. The Commission's forfeiture guidelines currently establish a base
forfeiture amount of $40,000 for violations of our rules and orders
regarding unauthorized changes of preferred interexchange carriers.
The Commission has warned carriers that it will take swift and
decisive enforcement action, including the imposition of substantial
monetary forfeitures, against any carrier found to have engaged in
slamming. Applying the $40,000 base forfeiture amount to each of the
27 unauthorized carrier changes results in a forfeiture amount of
$1,080,000.
15. In this case, LDC has also repeatedly failed to respond to slamming
complaints CGB sent to the Company. Seven of these complaints are
within the one-year statute of limitations and are therefore
actionable. Section 1.80 of the Commission's rules establishes a base
forfeiture amount of $4,000 for failure to respond to a Commission
communication. Applying the $4,000 base forfeiture amount to each of
the seven complaints results in a forfeiture of $28,000.
16. While we consider LDC's conduct particularly egregious, as
demonstrated by its failure to respond to the complaints that form the
basis of this NAL, and would normally find a significant upward
adjustment appropriate, we do not propose an upward adjustment in
light of LDC's size and its apparent inability to pay a higher amount.
Instead, we find that a proposed forfeiture amount of $1,108,000 is
appropriate under the circumstances of this case. We believe a
proposed $1,108,000 forfeiture amount will protect the interests of
consumers and serve as an adequate deterrent. Carriers should,
however, be on notice that the Commission considers violations such as
the ones discussed herein to be serious and that future similar
violations may receive significant upward adjustments.
IV. CONCLUSION
17. We have determined that LDC Telecommunications, Inc. has apparently
willfully and repeatedly violated Section 258 of the Communications
Act of 1934, as amended, and Sections 64.1120 and 64.1150 of the
Commission's rules.
V. ORDERING CLAUSES
18. Accordingly, IT IS ORDERED, pursuant to Section 503(b) of the
Communications Act of 1934, as amended, 47 U.S.C. S: 503(b), and
Section 1.80 of the Commission's rules, 47 C.F.R. S: 1.80, that LDC
Telecommunications, Inc. is hereby NOTIFIED of this APPARENT LIABILITY
FOR FORFEITURE in the amount of one million, one hundred eight
thousand dollars ($1,108,000), for willful and repeated violations of
Section 258 of the Communications Act of 1934, as amended, 47 U.S.C.
S: 258, and Sections 64.1120 and 64.1150 of the Commission's rules, 47
C.F.R. S:S: 64.1120 and 64.1150.
19. IT IS FURTHER ORDERED that, pursuant to Section 1.80 of the
Commission's rules, within thirty (30) days of the release date of
this Notice of Apparent Liability for Forfeiture, LDC
Telecommunications, Inc. SHALL PAY the full amount of the proposed
forfeiture or SHALL FILE a written statement seeking reduction or
cancellation of the proposed forfeiture.
20. Payment of the forfeiture must be made by check or similar instrument,
wire transfer, or credit card, and must include the NAL/Account number
and FRN referenced above. LDC Telecommunications, Inc. shall send
electronic notification of payment to Johnny Drake at
Johnny.Drake@fcc.gov on the date said payment is made. Regardless of
the form of payment, a completed FCC Form 159 (Remittance Advice) must
be submitted. When completing the FCC Form 159, enter the Account
Number in block number 23A (call sign/other ID) and enter the letters
"FORF" in block number 24A (payment type code). Below are additional
instructions you should follow based on the form of payment you
select:
* Payment by check or money order must be made payable to the order of
the Federal Communications Commission. Such payments (along with the
completed Form 159) must be mailed to Federal Communications
Commission, P.O. Box 979088, St. Louis, MO 63197-9000, or sent
via overnight mail to U.S. Bank - Government Lockbox #979088,
SL-MO-C2-GL, 1005 Convention Plaza, St. Louis, MO 63101.
* Payment by wire transfer must be made to ABA Number 021030004,
receiving bank TREAS/NYC, and Account Number 27000001. To complete
the wire transfer and ensure appropriate crediting of the wired funds,
a completed Form 159 must be faxed to U.S. Bank at (314) 418-4232 on
the same business day the wire transfer is initiated.
* Payment by credit card must be made by providing the required credit
card information on FCC Form 159 and signing and dating the Form 159
to authorize the credit card payment. The completed Form 159 must then
be mailed to Federal Communications Commission, P.O. Box 979088, St.
Louis, MO 63197-9000, or sent via overnight mail to U.S. Bank -
Government Lockbox #979088, SL-MO-C2-GL, 1005 Convention Plaza, St.
Louis, MO 63101.
Any request for full payment under an installment plan should be sent to:
Chief Financial Officer-Financial Operations, Federal Communications
Commission, 445 12th Street, S.W., Room 1-A625, Washington, D.C. 20554.
If you have questions regarding payment procedures, please contact the
Financial Operations Group Help Desk by phone, 1-877-480-3201, or by
e-mail, ARINQUIRIES@fcc.gov.
21. The response, if any, must be mailed both to: Marlene H. Dortch,
Secretary, Federal Communications Commission, 445 12th Street, SW,
Washington, DC 20554, ATTN: Enforcement Bureau - Telecommunications
Consumers Division; and to Richard A. Hindman, Division Chief,
Telecommunications Consumers Division, Enforcement Bureau, Federal
Communications Commission, 445 12th Street, SW, Washington, DC 20554,
and must include the NAL/Acct. No. referenced in the caption.
Documents sent by overnight mail (other than United States Postal
Service Express Mail) must be addressed to: Marlene H. Dortch,
Secretary, Federal Communications Commission, Office of the Secretary,
9300 East Hampton Drive, Capitol Heights, MD 20743. Hand or
messenger-delivered mail should be directed, without envelopes, to:
Marlene H. Dortch, Secretary, Federal Communications Commission,
Office of the Secretary, 445 12th Street, SW, Washington, DC 20554
(deliveries accepted Monday through Friday 8:00 a.m. to 7:00 p.m.
only). See www.fcc.gov/osec/guidelines.html for further instructions
on FCC filing addresses.
22. The Commission will not consider reducing or canceling a forfeiture in
response to a claim of inability to pay unless the petitioner submits
(1) federal tax returns for the most recent three-year period; (2)
financial statements prepared according to generally accepted
accounting practices; or (3) some other reliable and objective
documentation that accurately reflects the petitioner's current
financial status. Any claim of inability to pay must specifically
identify the basis for the claim by reference to the financial
documentation submitted.
23. IT IS FURTHER ORDERED that a copy of this Notice of Apparent Liability
for Forfeiture shall be sent by Certified Mail Return Receipt
Requested and First Class mail to LDC Telecommunications, Inc.,
Attention: Sean Connors and Richard Clark, 2451 McMullen Booth Road,
Suite 200, Clearwater, Florida 33759.
FEDERAL COMMUNICATIONS COMMISSION
Marlene H. Dortch
Secretary
APPENDIX
Complainant Commission File No., if Date of Slam
Filed with FCC
R. Tartaglio (Randolph's Fine 11-S3212284 8/31/11
Jewelry)
S. MacPhail 11-S3211346 9/1/11
J. Dye 11-C00329991-1 9/6/11
C. Fry 11-C00330687-1 9/8/11
R. Gittel 11-C00330879 9/9/11
J. Hartman 11-C00330862 9/9/11
D. Roberts 11-C00331375 9/12/11
K. Pierce 11-S3247574 9/13/11
N. Habecker 11-C00332259 9/14/11
T. Cunningham 11-S003228 9/17/11
R. Morton (Cox Roofing Co.) 11-S3251644 9/21/11
B. Roadarmel 11-C00333876 9/21/11
J. Janda 11-S3255020 10/4/11
D. Goggans 12-S3308637 12/26/11
K. Ames 12-S3332060 1/4/12
S. Saykali 1/17/12
R. Efird 12-C00370314 2/13/12
P. Desler 2/16/12
W. Wolf (AAA Concrete) 11-C00392934 3/3/12
S. Bodenhamer 3/29/12
L. Adams (Stewartstown 12-S3409098 4/15/12
Presbyterian Church)
T. Rose 12-S3435907 4/15/12
P. Dehlan (California Smog 12-C00390144 4/18/12
Repair, Inc.)
M. Boyd (Heritage 12-S003392 4/23/12
Transmission & Motors)
S. Boschken 4/27/12
B. Cox 12-S3428519 5/15/12
M. Pryor 12-C00397979 5/23/12
STATEMENT OF COMMISSIONER AJIT PAI,
APPROVING IN PART AND DISSENTING IN PART
Re: LDC Telecommunications, Inc. Apparent Liability for Forfeiture, File
No. EB-TCD-12-00000420, NAL/Acct. No.: 201232170010, FRN: 0004337556,
Notice of Apparent Liability for Forfeiture
I support today's action against LDC Telecommunications, Inc., which
apparently substituted itself as the long-distance service provider for
(or "slammed," as it is more commonly known) at least 27 consumers without
proper authorization. And I thank the Enforcement Bureau staff for the
diligent investigative work that led to this order. When a company evades
responding to Commission inquiries, consumers will be vindicated only if
our staff remains vigilant in pursuing the alleged violator.
There is one aspect of today's order where I diverge from my colleagues.
In my view, the forfeiture amount proposed by the Commission is simply too
low given the egregious nature of LDC's conduct. LDC failed to provide a
single verification tape showing it had authorization to switch a
consumer's long-distance service provider (as required under our rules)
and provided no defense whatsoever with respect to 24 of the complaints at
issue. Moreover, LDC's business appears to have been immensely profitable:
Consumers who were the victims of LDC's slamming reported receiving
monthly bills of $128.67, $189.13, $259.51, and $371.14 even though those
same consumers' previous long-distance bills had been about $20. As
mentioned above, LDC also simply ignored our inquiries, which prompted the
Commission earlier this year to follow up with a Notice of Apparent
Liability. Finally, LDC's treatment of consumers who complained to them
was appalling. LDC staff did not return phone calls, hung up on callers,
refused to take calls, and otherwise gave consumers the run-around. If a
caller somehow managed to reach a supervisor, the response was apparently
"File a complaint with the FCC." Thankfully, more than twenty-seven of
those consumers took them up on the suggestion and did in fact file
complaints with the Commission. It thus became our duty to respond
appropriately. Part of that duty involves finding a violation of our
rules; the other part requires fixing a forfeiture amount calibrated to
protect consumers' interests and deter future violations.
It is in carrying out that second aspect of our adjudicative duty where I
cannot follow my colleagues' path. The Commission limits the amount of the
proposed forfeiture here based upon "LDC's size and its apparent inability
to pay a higher amount." The initial problem with this approach is that we
don't have sufficient information to know if this is true. Moreover, the
normal course-as recognized by the Commission just six paragraphs later-is
that we take into account an apparent violator's (in)ability to pay a
forfeiture after the apparent violator responds to the Notice of Apparent
Liability with concrete evidence that it cannot pay. This makes sense: We
can lower a proposed forfeiture that is too high, but leniency requires a
factual foundation. And because the company is in the best (perhaps only)
position to demonstrate its ability to pay, we need not guess at this
point when the company may provide accurate information later, if and when
it responds to the Notice. LDC did not take into account consumers'
ability to pay when it sent expensive long-distance bills to those it had
slammed, and I do not think that it is our role to make LDC's
ability-to-pay argument for it at this stage of the proceeding.
In sum, I agree with the Commission that LDC's conduct was "particularly
egregious" and that it warrants a "significant upward adjustment" in the
proposed forfeiture amount. This is not a run-of-the-mill case that
warrants only a base forfeiture. Because I believe that the forfeiture
amount should indeed be significantly higher, I respectfully dissent in
part.
This case was formerly assigned the file number EB-11-TC-105. In January
2012, the Telecommunications Consumers Division assigned the case a new
number.
According to the Commission's records and publicly available information,
LDC is a non-facilities based interexchange carrier with offices at 2451
McMullen Booth Road, Suite 200, Clearwater, FL 33759. The Company's
President is Sean Connors and the Chief Operating Officer is Richard
Clark. LDC is authorized to provide facilities-based and resold
international telecommunications services. See ITC-214-20080523-00238,
Public Notice, "International Authorizations Granted: Section 214
Applications (47 C.F.R. S: 63.18); Section 310(b)(4) Requests" (Jan. 2,
2009).
47 U.S.C. S: 258.
47 C.F.R. S:S: 64.1120 and 64.1150.
In addition, the Bureau obtained slamming complaints from other sources
such as the Federal Trade Commission (FTC) and the Better Business Bureau
(BBB).
See 47 C.F.R. S: 64.1150(c), (d).
Id. at 64.1150(d).
The failure of LDC to respond or provide proof of verification is presumed
to be clear and convincing evidence of a violation. See 47 C.F.R. S:
64.1150(d).
See LDC Telecommunications, Inc., Complaint Regarding Unauthorized Change
of Subscriber's Telecommunications Carrier, Order, 25 FCC Rcd 12472 (CGB
2010); LDC Telecommunications, Inc., Complaint Regarding Unauthorized
Change of Subscriber's Telecommunications Carrier, Order, 23 FCC Rcd 11478
(CGB 2008); LDC Telecommunications, Inc., Complaint Regarding Unauthorized
Change of Subscriber's Telecommunications Carrier, Order, 23 FCC Rcd 11337
(CGB 2008); LDC Telecommunications, Inc., Complaint Regarding Unauthorized
Change of Subscriber's Telecommunications Carrier, Order, 23 FCC Rcd 10256
(CGB 2008); LDC Telecommunications, Inc., Complaint Regarding Unauthorized
Change of Subscriber's Telecommunications Carrier, Order, 23 FCC Rcd 8486
(CGB 2008).
See Letter from Richard A. Hindman, Chief, Telecommunications Consumers
Division, FCC Enforcement Bureau, to LDC Telecommunications, Inc., Attn:
Sean Connors (Oct. 13, 2011) (on file in EB-TCD-12-420) (LOI).
See LDC Telecommunications, Inc., Notice of Apparent Liability for
Forfeiture, 27 FCC Rcd 300 (2012) (First LDC NAL) (proposing a $25,000
forfeiture against LDC for failing to respond to the Bureau's LOI).
See E-mail from Sean Connors, President of LDC, to Richard A. Hindman,
Chief, Telecommunications Consumers Division, FCC Enforcement Bureau (Feb.
3, 2011) (on file in EB-TCD-12-420) (LOI Response). LDC's response
included a one page document in response to the LOI questions. On February
8, 2012, LDC emailed supporting documents. See Emails from Sean Connors,
President of LDC, to Erica McMahon, Attorney Advisor, Telecommunications
Consumers Division, FCC Enforcement Bureau (Feb. 8, 2012, 10:42 and 10:46
AM EST). On April 3, 2012, LDC supplemented its LOI Response. See Email
from Richard Clark, Chief Operating Officer of LDC, to Erica McMahon,
Attorney Advisor, Telecommunications Consumers Division, FCC Enforcement
Bureau (Apr. 3, 2012) (Supplemental LOI Response). On April 9, 2012, LDC
provided additional documents required by the LOI. See Emails from Richard
Clark, Chief Operating Officer of LDC, to Erica McMahon, Attorney Advisor,
Telecommunications Consumers Division, FCC Enforcement Bureau (Apr. 9,
2012, 11:37 AM, 1:52 PM, 1:57 PM EST) (Second Supplemental Response).
47 U.S.C. S: 258(a).
Id.
47 C.F.R. S: 64.1120(a)(1)(i), (ii).
See 47 C.F.R. S: 64.1120(c).
47 C.F.R. S: 64.1120(c)(3)(iii).
See 47 C.F.R. S: 64.1120(c)(3)(iii).
Id.
47 C.F.R. S: 64.1120(c)(3)(iv).
Some complainants mischaracterize the potential violation as a "cram." The
evidence before us, however, which includes copies of many complainants'
telephone bills, shows that complainants' preferred carrier selections had
been switched to LDC; therefore, the violation at issue is slamming, not
cramming.
See LOI supra note 10.
See TPVs provided with Second Supplemental Response. LDC also provided a
fourth TPV for a consumer whose complaint is outside the one-year statute
of limitations. We note that the fact that LDC eventually provided these
TPVs in response to the Bureau's LOI does not absolve it of its obligation
to have responded timely to CGB's Notices of Informal Complaint.
Id.
We note that not all of the complaints cited in this NAL arise out of
incidents that occurred within one year of the release date of this NAL.
Although our proposed forfeiture amount is based solely on the complaints
that are within the statute of limitations, all of the complaints
discussed herein illustrate the egregious nature of LDC's conduct. See
Sandhill Communications, Notice of Apparent Liability, 25 FCC Rcd 17762,
17769 n.45 (Enf. Bur. 2010) (noting that Section 503(b)(6) does not bar
the Commission from assessing whether a company's conduct prior to the
statute of limitations period violated the Act and Commission rules and
from considering such conduct in determining the appropriate forfeiture
amount for violations that occurred within the one-year statutory period).
The contact telephone number provided on the consumers' bills is for ILD
Teleservices, Inc. (ILD). When consumers contacted ILD about the charges,
ILD often referred them to LDC. See, e.g., Complaint from S. Comfort;
Complaint from W. Gonzalez; Complaint from R. Morton. Apparently, LDC paid
ILD to manage its billing requests to the LECs. LDC passed the consumer's
telephone number to ILD, which in turn passed the number on to the LEC
that provides the consumer`s landline telephone service. LDC's charges
then began appearing on the customer's telephone bill. In recent months,
it appears that LDC began using ILD to bill consumers directly without
going through the LECs. See Complaint from Heritage Motors (attaching an
invoice the company received from LDC).
Complaint from J. Janda; see also Complaint from S. Avina ("I tried to
contact [LDC] for two months but no response."); Complaint from C.
Barnette ("When I [saw] charges on my AT&T bill from [LDC], I immediately
called them and was told that they would credit back the charges and would
close my account. Then the next month I [saw] new charges and no credit
for the other charges . . . I called on 2/21 and left a message because no
one ever answers. You have to leave a message and they will call you back.
I didn't get a call back."); Complaint from T. Cunningham ("[LDC] has not
contacted us about restitution. They will not return any phone calls or
correspondence."); Complaint from V. Patterson ("I have tried to contact
LDC [] since October, only a voice mail machine answers stating that all
representatives are busy. We have called numerous times and attempted to
contact them numerous times before filing a complaint.").
Complaint from R. Morton. See also Complaint from T. Heller ("I called ILD
Teleservices . . . I spoke to Rachel. She cancelled the account and said
[ILD] would give me 20 percent credit on the charges. I was angry; I said
no I wanted full credit because I didn't authorize the charges. So she
gave me no credit. She wouldn't play the recording for me that she said
she had with somebody giving authorization for the switch. She said I
would have to file a complaint with the FCC to hear the recording.");
Complaint from R. Tartaglio ("They (LDC Telecommunications) refused to
give us any information about the supposed `authorization.' They would not
comply with any information until an informal complaint is filed with the
FCC.").
Complaint from S. Boschken. In some cases, the rates LDC charged were
significantly higher than those of the consumer's preferred carrier. See
Complaint from H. Gleckman, who had unlimited long distance service for
around $20 with Verizon, and was charged $128.67 by LDC in one month for
long distance calls; Complaint from D. Goggans, who has unlimited long
distance service with AT&T for $21 a month, and was charged $189.13 by LDC
for long distance calls in one month.
We previously released an NAL addressing LDC's apparent failure to respond
to the Bureau's LOI. See First LDC NAL supra note 11. We do not address
the issues raised in the First LDC NAL at this time.
Under the authority of Section 217 of the Act, the Commission has held
carriers responsible for the failures of their telemarketers and third
party verification companies to obtain proper authorization and
verification for changes made to consumers' primary carriers. LDC has
failed to provide any evidence that it should not be held responsible for
the actions of its third party verification company in the three cases
where it produced verification tapes. See Long Distance Direct, Inc.,
Memorandum Opinion and Order, 15 FCC Rcd 3297, 3300, para. 9 (2000);
47 U.S.C. S: 217. The Commission has held that licensees and other
Commission regulatees are responsible for the acts and omissions of their
employees and independent contractors, and consistently refused to excuse
licensees from forfeiture penalties where actions of employees or
independent contractors have resulted in violations. See Eure Family
Limited Partnership, Memorandum Opinion and Order, 17 FCC Rcd 21861,
21863-21864, para. 7 (2002) (citing American Paging, Inc. of Virginia,
Memorandum Opinion and Order, 12 FCC Rcd 10417, 10420, para. 11 (Wireless
Bur., Enf. and Cons. Inf. Div. 1997) (quoting Triad Broadcasting Company,
Inc., Memorandum Opinion and Order, 96 FCC 2d 1235, 1244, para. 21
(1984)).
47 U.S.C. S: 503(b)(1)(B); see also 47 C.F.R. S: 1.80(a)(2).
47 U.S.C. S: 503(b)(2)(B); see also 47 C.F.R. S: 1.80(b)(2); Amendment of
Section 1.80 of the Commission's Rules and Adjustment of Forfeiture Maxima
to Reflect Inflation, Order, 23 FCC Rcd 9845 (2008) (adjusting the maximum
statutory amounts from $130,000/$1,300,000 to $150,000/$1,500,000).
47 U.S.C. S: 503(b)(1)(B) (the Commission has authority under this section
of the Act 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 under the Act); see also 47
U.S.C. S: 503(b)(4)(A) (providing that the Commission must assess such
penalties through the use of a written notice of apparent liability or
notice of opportunity for hearing).
Southern California Broadcasting Co., Memorandum Opinion and Order, 6 FCC
Rcd 4387, 4388, para. 5 (1991).
47 U.S.C. S: 503(b)(2)(E); see also The Commission's Forfeiture Policy
Statement and Amendment of Section 1.80 of the Rules to Incorporate the
Forfeiture Guidelines, 12 FCC Rcd 17087, 17100 (1997) (Forfeiture Policy
Statement); recon. denied 15 FCC Rcd 303 (1999); 47 C.F.R. S: 1.80(b)(4).
Forfeiture Policy Statement, 12 FCC Rcd at 17098-99, para. 22.
See 47 C.F.R. S: 1.80(b).
See, e.g., Brittan Communications International Corp., Order of
Forfeiture, 15 FCC Rcd 4852 (2000); Amer-I-Net Services Corp., Notice of
Apparent Liability for Forfeiture, 15 FCC Rcd 3118 (2000); All American
Telephone Company, Inc., Notice of Apparent Liability for Forfeiture, 13
FCC Rcd 15040 (1998); Silv Communication Inc., Notice of Apparent
Liability for Forfeiture, 25 FCC Rcd 5178 (2010).
These seven complaints are a subset of the 27 total slamming violations.
47 C.F.R. S: 1.80; see also Forfeiture Policy Statement, 12 FCC Rcd at
17114.
47 C.F.R. S: 1.80.
An FCC Form 159 and detailed instructions for completing the form may be
obtained at http://www.fcc.gov/Forms/Form159/159.pdf.
See 47 C.F.R. S: 1.1914.
All further communications with respect to this case should use the new
file number.
As today's order notes, LDC was largely unresponsive to Commission
inquiries until three months after the Commission issued a Notice of
Apparent Liability against LDC for failing to respond to our inquiries.
See Notice of Apparent Liability for Forfeiture at para. 3; LDC
Telecommunications, Inc., Notice of Apparent Liability for Forfeiture, 27
FCC Rcd 300 (2012).
Notice of Apparently Liability for Forfeiture at paras. 8-10.
Id. at para. 11 & notes 26-29.
Id. at para. 16.
Specifically, the Commission states that it "will not consider reducing or
canceling a forfeiture in response to a claim of inability to pay unless
the petitioner submits (1) federal tax returns for the most recent
three-year period; (2) financial statements prepared according to
generally accepted accounting practices; or (3) some other reliable and
objective documentation that accurately reflects the petitioner's current
financial status." Id. at para. 22.
Id. at para. 16.
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Federal Communications Commission FCC 12-97
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Federal Communications Commission FCC 12-97