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Federal Communications Commission FCC 19-25
Before the
Federal Communications Commission
Washington, DC 20554
In the Matter of ) File No.: EB-TCD-14-00017401
) NAL/Acct. No.: 201532170015
Long Distance Consolidated Billing Company ) FRN: 0004337499
)
FORFEITURE ORDER
Adopted: March 19, 2019 Released: March 21, 2019
By the Commission: Commissioner O’Rielly approving in part, dissenting in part, and issuing a separate
statement.
I. INTRODUCTION
1. We impose a penalty of $2,320,000 against Long Distance Consolidated Billing
Company (LDCB or Company) for changing consumers’ long distance carriers without proper
authorization, a practice commonly known as “slamming,” and charging consumers for service that they
never authorized, a practice commonly known as “cramming.” In addition, we find that LDCB’s
telemarketers engaged in deceptive marketing practices by impersonating consumers’ existing long
distance carriers and misrepresenting the true nature of their sales calls. Slamming and cramming are
deceptive business practices that result in consumers paying for services they never requested and then
expending great time and personal effort to return to their preferred carriers. These practices are made
even more egregious where, as here, they are coupled with deceptive marketing. After reviewing
LDCB’s response to the Notice of Apparent Liability for Forfeiture (NAL), we find reason to reduce the
proposed penalty by $80,000 and we therefore assess a forfeiture of $2,320,000.
II. BACKGROUND
2. The Federal Communications Commission’s (Commission’s or FCC’s) Enforcement
Bureau (Bureau) initiated an investigation of LDCB1
after reviewing more than 70 complaints filed
against the Company by consumers, many of whom are small businesses. The complaints alleged a
pattern of misconduct whereby LDCB misrepresented its identity or the nature of its sales calls when
marketing its long distance service to consumers. LDCB used the “authorizations” fraudulently obtained
through this misconduct to change the consumers’ long distance carriers and bill them for LDCB’s
service.
3. On July 30, 2015, the Commission unanimously adopted an NAL2
proposing a
$2,400,000 forfeiture against LDCB for willful and repeated violations of Sections 201(b) and 258 of the
Communications Act of 1934, as amended (Act), and Section 64.1120 of the Commission’s rules
(Rules).3
In the NAL, the Commission found that the Company apparently violated Section 201(b) of the
Act by: (i) deceptively marketing its long distance service to consumers by misrepresenting itself as the
1
LDCB is a non-facilities based interexchange carrier with offices at 4010 W. Walton Blvd, Suite B, Waterford, MI
48329. LDCB’s President is Jan M. Lowe.
2
The NAL includes a more complete discussion of the facts and history of this case and is incorporated herein by
reference. See Long Distance Consolidated Billing Company, Notice of Apparent Liability for Forfeiture, 30 FCC
Rcd 8664, 8664-65, paras. 2-3 (2015) (NAL).
3
Id. See 47 U.S.C. §§ 201(b), 258; 47 CFR § 64.1120.
Federal Communications Commission FCC 19-25
4 and
consumer’s existing carrier and/or otherwise misrepresenting the purpose of the telemarketing call;
(ii) placing unauthorized charges for service on consumers’ local telephone bills.5 In addition, the
Commission found that LDCB apparently violated Section 258 of the Act and Section 64.1120 of the
Rules by submitting requests to switch consumers’ long distance service providers without their
authorization.6
The NAL ordered LDCB to, within 30 days, either pay the proposed forfeiture amount, or
submit evidence or arguments in response to the NAL that no forfeiture should be imposed or that some
7
lesser amount should be assessed.
4. On September 28, 2015, LDCB filed a response to the NAL, arguing that the NAL should
8
be canceled or the forfeiture reduced. The Company contends that: (i) its telemarketers acted beyond
the scope of their authority when making misrepresentations to consumers;9 (ii) imposing liability on
LDCB for the improper sales pitches of its telemarketers is problematic from a First Amendment
perspective, as the Commission “seeks to enforce content-based restrictions on speech;”10 (iii) it did not
slam consumers because its third party verification (TPV) recordings comply with the Rules;11 (iv) it
should not be liable for cramming violations because the TPV recordings show that consumers authorized
a carrier change;12 (v) the Commission’s enforcement action violates due process requirements;13 and (vi)
14
five of the forty-nine violations are barred by the statute of limitations. LDCB also argues that the
15
proposed forfeiture is excessive and disproportionate to LDCB’s ability to pay.
5. The Commission proposed a forfeiture in this case in accordance with Section 503(b) of
the Communications Act of 1934, as amended (Act),16 Section 1.80 of the Commission’s rules (Rules),17
4
NAL, 30 FCC Rcd at 8666-68, paras. 5-12.
5
Id. at 8669-70, paras. 17-19.
6
Id. at 8668-69, paras. 13-16.
7
Id. at 8672-73, para. 25.
8
See Statement of Long Distance Consolidated Billing Co. Seeking Cancellation or Substantial Reduction of
Proposed Forfeiture (Sept. 28, 2015) (on file in EB-TCD-14-00017401) (NAL Response). LDCB requested and was
granted an extension of time, until September 28, 2015, to file a response to the NAL. See E-mail from Erica
McMahon, Attorney Advisor, Telecommunications Consumers Division, FCC Enforcement Bureau, to Cheng-yi
Liu, Fletcher, Heald & Hildreth, P.L.C., Counsel for Long Distance Consolidated Billing Company (Aug. 4, 2015,
15:40 ET). LDCB filed a supplement to its NAL Response on May 13, 2016, and although the supplement was filed
after the 30-day filing deadline, we address the additional arguments raised in the supplement. See Supplement to
Statement Seeking Cancellation or Substantial Reduction of Proposed Forfeiture (May 13, 2016) (on file in EB-
TCD-14-00017401) (Supplemental NAL Response).
9
NAL Response at 1-14; Supplemental NAL Response at 1-6.
10 Supplemental NAL Response at 6.
11 NAL Response at 1-7.
12 Id. at 8-9.
13 Supplemental NAL Response at 9-11.
14 NAL Response at 9-10.
15 Id. at 14-16.
16 47 U.S.C. § 503(b).
17 47 CFR § 1.80.
2
Federal Communications Commission FCC 19-25
and the Commission’s Forfeiture Policy Statement.18 When we assess forfeitures, Section 503(b)(2)(E)
requires that we 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.”19
III. DISCUSSION
6. We have fully considered LDCB’s response to the NAL. Based on the preponderance of
the evidence, including the consistent statements from consumers who filed complaints against LDCB,
we conclude that LDCB violated Section 201(b) of the Act by making misrepresentations to 11
consumers20 and placing unauthorized charges on 23 consumers’ telephone bills.21 We also affirm the
findings in the NAL that LDCB violated Section 258 of the Act and Section 64.1120(c)(3) of the Rules by
failing to follow the Commission’s TPV requirements with respect to 15 consumers.22 With the exception
of LDCB’s argument that two slamming violations occurred outside of the Commission’s one-year statute
of limitations, we find none of them persuasive. We therefore assess a forfeiture of $2,320,000 for these
violations.
A. LDCB Violated Section 201(b) of the Act
7. Section 201(b) of the Act states, in pertinent part, that “[a]ll charges, practices,
classifications, and regulations for and in connection with [interstate or foreign] communication service
[by wire or radio], shall be just and reasonable, and any such charge, practice, classification, or regulation
that is unjust or unreasonable is declared to be unlawful.”23
1. LDCB Violated Section 201(b) of the Act by Deceptively Marketing its
Service to Consumers
8. The Commission has held that unfair and deceptive marketing practices by interstate
common carriers, including misrepresentations about a carrier’s identity or the nature of its service that
are made to obtain a consumer’s authorization to change his or her preferred long distance carrier, are
unjust and unreasonable practices under Section 201(b) of the Act.24 We affirm the findings of the NAL
18 The Commission’s Forfeiture Policy Statement and Amendment of Section 1.80 of the Rules to Incorporate the
Forfeiture Guidelines, Report and Order, 12 FCC Rcd 17087 (1997) (Forfeiture Policy Statement), recons. denied,
Memorandum Opinion and Order, 15 FCC Rcd 303 (1999).
19 47 U.S.C. § 503(b)(2)(E).
20 NAL, 30 FCC Rcd at 8665-68, paras. 5-12.
21 Id. at 8669–70, paras. 17-19. LDCB caused the charges to be placed on consumers’ AT&T, CenturyLink, and
Verizon telephone bills through its contract with billing aggregator, BSG Clearing Solutions. AT&T, CenturyLink,
and Verizon placed the charges on the telephone bills of their customers. Section 201(b) applies whether a carrier
places the charges on a consumer’s telephone bill directly or indirectly through the billing carrier.
22 Id. at 8668–69, paras. 13-16.
23 47 U.S.C. § 201(b).
24 See, e.g., Advantage Telecommunications Corp., Forfeiture Order, 32 FCC Rcd 3723, 3725, para. 7 (2017)
(Advantage Forfeiture Order); Preferred Long Distance, Inc., Forfeiture Order, 30 FCC Rcd 13711, 13718, para. 16
(2015) (Preferred Forfeiture Order); Business Discount Plan, Inc., Order of Forfeiture, 15 FCC Rcd 14461, 14469,
para. 17 (2000) (BDP Forfeiture Order); Preferred Long Distance, Inc., Notice of Apparent Liability for Forfeiture,
27 FCC Rcd 16489, 16491, para. 7 (2012) (Preferred NAL); United Telecom, Inc., Notice of Apparent Liability for
Forfeiture, 27 FCC Rcd 16499, 16502, para. 9 (2012) (United NAL); Silv Communication Inc., Notice of Apparent
Liability for Forfeiture, 25 FCC Rcd 5178, 5180–82, paras. 5–7 (2010) (Silv NAL). Consistent with prior
Commission decisions, our Section 201(b) authority relevant here to address the telemarketing practices of an
interexchange carrier, for or in connection with its telecommunications service, is not limited by the enactment of
Section 258 of the Act. See, e.g., Implementation of the Subscriber Carrier Selection Changes Provisions of the
(continued….)
3
Federal Communications Commission FCC 19-25
that LDCB violated Section 201(b) by engaging in deceptive marketing practices in an effort to obtain
authorization to change the long distance carriers of 11 consumers.25 The contents of the 11 consumer
complaints show, by a preponderance of the evidence,26 that LDCB (through its telemarketers) violated
Section 201(b). We find that the complainants’ statements about their experiences with LDCB’s
telemarketers constitute reliable evidence of LDCB’s Section 201(b) violations.27
9. LDCB does not directly refute this evidence; instead the Company argues that the
apparent misrepresentations, “if true,” are the result of the unauthorized actions of its third-party
“independent contractors” acting beyond the scope of their authority.28 The Company maintains that it
provides a policy manual and sales script to its telemarketers to ensure that they market LDCB’s service
lawfully.29 LDCB argues that Section 217 of the Act provides that a carrier can only be liable for the acts
of its agent “acting within the scope of his employment;”30
that imposing liability on LDCB is barred by
“common principles of agency law” because the telemarketers were independent contractors, not
employees of LDCB, and did not have either actual or apparent authority to engage in deceptive
marketing.31 LDCB also contends that, upon becoming made aware of a problem, it took corrective
action by directing a “rogue” telemarketing company to terminate sales representatives suspected of
misrepresenting LDCB’s service to consumers.32 Finally, LDCB argues that its TPV recordings are
evidence that the consumers’ allegations of misrepresentations are “potentially suspect,” and that
consumers had not been deceived to believe the transaction “involved anything other than a carrier
change to LDCB.”33 We find none of these arguments persuasive and accordingly reject all of them.
10. The Commission has repeatedly held that carriers are responsible for the conduct of third
parties acting on the carrier’s behalf,34 including telemarketers who are independent contractors.35 LDCB
(Continued from previous page)
Telecommunications Act of 1996; 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, 1554-
55, para. 77 (1998) (in the context of a rulemaking implementing Section 258, interpreting Section 201(b) authority
to remain available to address deceptive sales tactics); see also Preferred Forfeiture Order, 30 FCC Rcd at 13718 &
n.54.
25 NAL, 30 FCC Rcd at 8665–68, paras. 5–12.
26 The use of the “preponderance of the evidence” standard is the traditional standard in civil and administrative
proceedings and is the one contemplated by the Administrative Procedure Act. 5 U.S.C. § 556(d). See 47 CFR §
1.80(f)(4) (the Commission may issue a forfeiture order upon consideration of all relevant information available to
it); SBC Communications, Inc., Forfeiture Order, 17 FCC Rcd 7589, 7591, para. 4 (2002) (applying preponderance
of the evidence standard in reviewing Bureau-level NAL).
27 See, e.g., Preferred Forfeiture Order, 30 FCC Rcd at 13719, 13722-23, paras. 17, 23 (finding that consumer
complaints were reliable because they were “detailed, consistent but not duplicative, and specific”).
28 NAL Response at 11.
29 Id. at 12.
30 Id.
31 Supplemental NAL Response at 1-5.
32 NAL Response at 13.
33 Id. at 13-14. Specifically, LDCB argues that its verifiers: “(1) disclosed that the purpose of the verification call
was to ‘obtain authorization for a carrier change to [LDCB], . . . ’; (2) confirmed that the caller was ‘authorized to
make this carrier change . . . ’; (3) confirmed an intention to make a carrier change; (4) confirmed authorization for
the carrier changes; and (5) informed the caller that ‘[t]he call you received was made by a representative of [LDCB]
which is independent of your local telephone company.’”
34 See Eure Family Ltd. Partnership, Memorandum Opinion and Order, 17 FCC Rcd 21861, 21863-64, para. 7
(2002); Long Distance Direct, Inc., Memorandum Opinion and Order, 15 FCC Rcd 3297, 3300, para. 9 (2000)
(continued….)
4
Federal Communications Commission FCC 19-25
is not relieved of liability simply because it provided its telemarketers with a policy manual and sales
script and directed its telemarketers to market its service “through lawful means.”36 LDCB essentially
argues that its telemarketers must not have followed its sales script because the script contained no
misrepresentations.37 That issue may be a dispute between LDCB and its contractors,38 but it is not a
defense to a statutory or rule violation. Section 217 of the Act deems “the act, omission or failure of any .
. . person acting for or employed by” any carrier to be the act, omission or failure of that carrier.39 This
language extends to entities acting on behalf of LDCB in marketing the Company’s services. The
question under Section 217 is not whether these individuals were acting consistently with LDCB policy
manuals, but whether they were acting “within the scope of their employment” as LDCB’s agents. To
hold that Section 217 does not extend to independent contractors acting inconsistently with the carrier’s
40
policy would create a loophole in the requirements of the Act and frustrate clear legislative intent. The
evidence shows that despite LDCB’s policy manual and “mandatory, approved sales script,”41 LDCB’s
telemarketers misrepresented their identity and the purpose of their sales calls to at least 11 consumers.42
They did so on behalf of LDCB in an effort to switch consumers’ carriers to LDCB. The
misrepresentations by LDCB’s telemarketers were made for the benefit of LDCB and within the scope of
their engagement with LDCB (to enroll new customers). We therefore hold LDCB responsible for such
misrepresentations.
11. We also reject LDCB’s claim that the Commission cannot hold LDCB liable for
deceptive marketing because it cannot demonstrate that LDCB was aware of its telemarketers’
(Continued from previous page)
(LDDI MO&O); Vista Services Corp., Order of Forfeiture, 15 FCC Rcd 20646, 20650, para. 9 (2000) (Vista
Forfeiture Order); American Paging, Inc. of Virginia, Memorandum Opinion and Order, 12 FCC Rcd 10417,
10420, para. 11 (1997); Triad Broadcasting Co., Inc., Memorandum Opinion and Order, 96 FCC 2d 1235, 1244,
para. 21 (1984); see also Silv NAL, 25 FCC Rcd at 5180, para. 5 & n.18.
35 See, e.g., Vista Forfeiture Order, 15 FCC Rcd at 20650, para. 9; Preferred Forfeiture Order, 30 FCC Rcd at
13724, para. 26; United NAL, 27 FCC Rcd at 16502, para. 8 (each holding that licensees and other Commission
regulatees are responsible for the acts and omissions of their employees and independent contractors); Silv NAL, 25
FCC Rcd at 5185, para. 14 (“[T]he Commission has held carriers to be 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.”).
36 See NAL Response at 12.
37 See id. at 7-8.
38 See Independent Contractor Agreements Attach. 27, Letter from Cheng-yi Lui, Fletcher, Heald & Hildreth,
P.L.C., Counsel for Long Distance Consolidated Billing Company, to Mika Savir, Attorney Advisor,
Telecommunications Consumers Division, FCC Enforcement Bureau (Dec. 22, 2014) (on file in EB-TCD-14-
00017401).
39 See 47 U.S.C. § 217 (“[T]he act, omission, or failure of any . . . agent[ ] or other person acting for or employed by
any common carrier . . . within the scope of his employment, shall in every case be also deemed to be the act,
omission, or failure of such carrier . . . .”); see also LDDI MO&O, 15 FCC Rcd at 3300, para. 9; Silv NAL, 25 FCC
Rcd at 5180, para. 5 & n.18.
40 See LDDI MO&O, 15 FCC Rcd at 3300, para. 9 (“Congress’s clear intent in enacting section 217 was to ensure
that common carriers not flout their statutory duties by delegating them to third parties”); Vista Forfeiture Order, 15
FCC Rcd at 20650, para. 9.
41 NAL Response at 12.
42 Additional consumers whose complaints pre-dated the NAL also alleged that LDCB’s telemarketers
misrepresented their identity and the purpose of the call. See Consumer complaints against LDCB on file in EB-
TCD-14-00017401.
5
Federal Communications Commission FCC 19-25
misconduct.43 The evidence shows that LDCB, in fact, had knowledge that its telemarketers were acting
improperly. LDCB received numerous complaints from consumers informing LDCB that its
telemarketers told them they were calling on behalf of or were affiliated with those consumers’ current
providers. In June 2014, a representative of Power Pro filed a complaint against LDCB stating:
I received a call from this company telling me that Century Link was moving everyone to
consolidated billing and that since I already had everything through Century Link nothing
would change on my bill. I very specifically asked at least twice if they were Century
Link because I didn’t want to change companies and he assured me they were . . . I am
very upset that Long Distance Consolidated Billing Co. out right lied to me. . . .44
Months later, consumers were still complaining about LDCB’s deceptive marketing practices. In January,
2015, Houston Duplicator Services explained that LDCB’s telemarketer called the business and pretended
to be calling from AT&T:
I received a call from a gentleman who posed as a representative of AT&T. He said that
I needed to go through the phone verification process for my long distance phone service.
Then, he connected me with the service to record my responses. When I did not hear
AT&T in the recording, I stopped the process and was reconnected with the gentleman
who had initially called me. He reassured me that, even though the name wasn't AT&T,
that it really was AT&T that was being represented, just trust him. So, I was reconnected
with the phone verification process and proceeded with the recording . . . I immediately
called AT&T and told them how I’d been ‘tricked’ into changing my LD service.45
12. Further, an alleged lack of knowledge regarding its telemarketers’ conduct or any
precautions LDCB claims it has taken does not relieve the Company of liability.46 As the Commission
explained in the Vista Forfeiture Order, “[n]either Vista’s alleged lack of knowledge or suspicions
regarding its telemarketers’ conduct nor the fact that Vista may have taken steps to prevent fraudulent
schemes, exonerates the company. . . . ‘[W]illfully,’ as employed in section 503(b) of the Act, does not
47
require a demonstration that Vista knew it was acting unlawfully.” Thus, LDCB’s alleged lack of
knowledge would not relieve the Company of liability, but this lack of knowledge is not supported by the
evidence in the record. After receiving similar complaints over the course of more than one year,48 there
is no evidence that LDCB took action to ensure the misrepresentations stopped. Instead, and despite the
fact that LDCB was on notice of such misrepresentations, LDCB continued to do business with the
telemarketing company involved. In response to complaints, LDCB said that while it “recognize[d] that
there can sometimes be certain problems associated with telemarketing,” the Company had a TPV
recording evidencing the consumer’s authorization to switch carriers to LDCB.49 After the Bureau
43 Supplemental NAL Response at 4–6.
44 Complaint from Power Pro, Inc. (filed June 23, 2014). See Complaint from Platinum Auto Works (filed Jan. 8,
2014) (stating that LDCB misrepresented themselves to the company).
45 Complaint from Houston Duplicator Services (filed Jan. 29, 2015).
46 See Vista Forfeiture Order, 15 FCC Rcd at 20650, para. 10.
47 Id. (footnotes omitted).
48 See generally Complaints on file in EB-TCD-14-00017401, most of which were either received by a regulatory
agency and sent to LDCB or were received by LDCB directly from consumers. Although the violations involving
misrepresentations discussed in the NAL occurred between August 11, 2014, and February 19, 2015 (See NAL, 30
FCC Rcd at 8675, Appendix), the record includes complaints alleging misrepresentations by LDCB’s telemarketers
going back to January 2014.
49 See, e.g., Letter from April Copeman, Regulatory Compliance Director, LDCB, to Veronica Etheridge, Analyst,
FCC Consumer & Governmental Affairs Bureau at 2 (June 8, 2015) (on file in EB-TCD-14-00017401); Letter from
(continued….)
6
Federal Communications Commission FCC 19-25
14. We also find unpersuasive LDCB’s argument that its TPV recordings demonstrate that
consumers were not deceived.60 As noted above, LDCB hired telemarketers to solicit consumers to
switch from their existing long distance carriers to LDCB.61 After a telemarketer allegedly obtained a
consumer’s consent to switch carriers, the call was transferred to a third party to verify the switch. LDCB
asserts that the recordings of the verification call (which do not include the sales portion of the call)
“serve as evidence that the allegations of apparent misrepresentations are potentially suspect” and
“uncorroborated.”62
15. We disagree with LDCB that the TPV recordings it submitted to the Commission
automatically disprove that unlawful misrepresentations were made during the separate telemarketing
calls. First, and most importantly, this argument suggests that a misrepresentation constitutes a violation
of Section 201(b) only if a consumer is actually deceived or harmed. Section 201(b), however, has no
requirement that a practice must create actual deception or cause harm in order to find that it is unjust or
unreasonable.63 A practice is unjust or unreasonable based on the conduct at issue, not a subjective
examination of its impact on each individual consumer or whether a particular consumer was in fact
misled. Finding violations based on the impact of the misconduct on each individual customer, would
create unacceptable uncertainty about whether or not a practice would violate the law in regard to a
particular consumer. Thus, a violation of Section 201(b) turns on the question of whether a carrier’s
practice (in the instant case, that a misrepresentation was made) is an unjust or unreasonable practice “in
connection with” a communications service.64
16. Even if we were to accept the argument that the TPV call “cleared up” the original
misrepresentation in the minds of affected consumers as to the identity of the carrier, it does not change
the fact that, through its telemarketers, LDCB engaged in an unjust and unreasonable practice in the first
instance and the violation of the Act could not be “cured” by the reliance on the subsequent TPV call.
Regardless, the record in this case underscores that the TPV calls did not cure the initial
misrepresentation. Specifically, we affirm the finding in the NAL that the complaints themselves
demonstrate that the verifier did not cure or clarify the misrepresentations in the consumers’ minds.65
These complaints are reliable, in part, because while they contain unique descriptions of consumers’
interactions with LDCB or its contractors, they are detailed, consistent but not duplicative, and specific.66
60 See NAL Response at 13-14; Supplemental NAL Response at 8-11. TPV is one method a carrier may use to
verify and record a consumer’s authorization to change his or her preferred long distance carrier. TPV must comply
with Section 64.1120(c)(3) of the Rules. See 47 CFR § 64.1120(c)(3).
61 See supra para. 8.
62 NAL Response at 13.
63 See 47 U.S.C. § 201(b).
64 Moreover, enforcement matters arising under Section 503 likewise have no “actual harm” requirement—all that is
needed to support a forfeiture penalty in a Section 503 proceeding is a determination that the Company has willfully
or repeatedly failed to comply with a provision of the Act or an FCC order. See 47 U.S.C. § 503(b)(1)(B); see also
Madison Communications, Inc., Order, 8 FCC Rcd 1759, 1760, para. 7 (1993) (“The fact that no actual harm was
demonstrated does not affect our determination that this was a serious violation justifying a significant forfeiture.”).
Furthermore, we note that forfeiture proceedings are distinct from complaint proceedings. The issue of whether
consumers are deceived by a misrepresentation may be relevant in complaint proceedings in determining the amount
of damages, but that issue is not necessarily relevant in the enforcement context. As opposed to damages assessed in
the complaint context, which are intended to make a particular member of the public whole, fines for wrongful
conduct assessed in the enforcement context are designed to protect the public.
65 NAL, 30 FCC Rcd at 8667-68, paras. 11-12.
66 Id. See Advantage Forfeiture Order, 32 FCC Rcd at 3725, para. 7; Preferred Forfeiture Order, 30 FCC Rcd at
13722-23, para. 23 (each finding that the consumer complaints were credible because they were detailed, consistent,
and specific).
8
Federal Communications Commission FCC 19-25
As we explained in the NAL, the complaints show that “LDCB, through its telemarketers, apparently
misrepresented itself to be AT&T, CenturyLink, or other carriers . . . and is evidence that LDCB was
engaged in deceptive conduct.”67 In their complaints, the consumers allege that they changed carriers
based on LDCB’s misrepresentations, and the TPV recordings contain no evidence that consumers
believed LDCB was a separate entity from their existing carriers. Thus, the TPV recordings do not
disprove the violation of Section 201(b) stemming from these misrepresentations.
17. Accordingly, based on the preponderance of the evidence, including consistent statements
from credible consumers who filed contemporaneous complaints against LDCB, we affirm the findings in
the NAL that LDCB made misrepresentations to 11 consumers, in violation of Section 201(b) of the Act.
2. LDCB Violated Section 201(b) of the Act by Placing Unauthorized Charges
on Consumers’ Telephone Bills
18. Cramming can occur either when third parties place or cause unauthorized charges to be
placed on consumers’ local telephone bills, or when billing carriers place unauthorized charges on the
telephone bills of their customers for their services or those of a third party.68 In either case, any
assessment of an unauthorized charge or fee on a telephone bill or for a telecommunications service is an
“unjust and unreasonable” practice under Section 201(b) of the Act.69
19. The Commission found in the NAL that LDCB placed unauthorized charges on 23
consumers’ local telephone bills.70 Each of the 23 complainants maintained that they neither requested
nor agreed to service provided by LDCB, and therefore that they were billed for service that they never
authorized. The Commission noted in the NAL that a carrier that engages in an initial slam that leads to a
subsequent cram violates both Sections 258 and 201(b) of the Act for slamming and cramming.71 In such
72
cases we may exercise our authority to assess forfeitures for both types of violations.
67 NAL, 30 FCC Rcd at 8667, para. 11.
68 See Advantage Forfeiture Order, 32 FCC Rcd at 3728, para. 14; see also Empowering Consumers to Prevent and
Detect Billing for Unauthorized Charges (“Cramming”), Report and Order and Further Notice of Proposed
Rulemaking, 27 FCC Rcd 4436, 4437, 4439, paras. 1, 6 (2012); Main Street Telephone Company, LLC, Notice of
Apparent Liability for Forfeiture, 26 FCC Rcd 8853, 8853-54, para. 2 (2011) (Main Street NAL).
69 See, e.g., LDDI MO&O, 15 FCC Rcd at 3302, para. 14 (finding the company’s practice of cramming membership
and other unauthorized fees on consumer telephone bills was an unjust and unreasonable practice in connection with
communication services); see also Telseven, LLC, Notice of Apparent Liability for Forfeiture, 27 FCC Rcd 15558,
15564, 15567, paras. 12, 16 (2012); Cheap2Dial Telephone, LLC, Notice of Apparent Liability for Forfeiture, 26
FCC Rcd 8863, 8870, para. 22 (2011); Main Street NAL, 26 FCC Rcd at 8859, para. 21; Norristown Telephone
Company, LLC, Notice of Apparent Liability for Forfeiture, 26 FCC Rcd 8844, 8849, para. 20 (2011);V oiceNet
Telephone, LLC, Notice of Apparent Liability for Forfeiture, 26 FCC Rcd 8874, 8880, para. 21 (2011).
70 See NAL, 30 FCC Rcd at 8669-70, paras. 17-19.
71 See Optic Internet Protocol, Inc., Notice of Apparent Liability for Forfeiture, 29 FCC Rcd 9056, 9063, para. 19
(2014), Forfeiture Order, 30 FCC Rcd 2539 (2015); Advantage Telecommunications Corp., Notice of Apparent
Liability for Forfeiture, 28 FCC Rcd 6843, 6850, para. 18 n.48 (2013)( Advantage NAL), Forfeiture Order, 32 FCC
Rcd 3723.
72 See Central Telecom Long Distance, Inc., Notice of Apparent Liability for Forfeiture, 29 FCC Rcd 5517, 5529,
para. 25 & n.83, Forfeiture Order, 31 FCC Rcd 10392 (2016) (Central Forfeiture Order); U.S. Telecom Long
Distance, Inc., Notice of Apparent Liability for Forfeiture, 29 FCC Rcd 823, 835-36, para. 24 & n.93, Forfeiture
Order, 31 FCC Rcd 10413 (2016) (USTLD Forfeiture Order); Consumer Telcom, Inc., Notice of Apparent Liability
for Forfeiture, 28 FCC Rcd 17196, 17208, para. 26 & n.78, Forfeiture Order, 31 FCC Rcd 10435 (2016) (CTI
Forfeiture Order). For those consumers whose slams took place outside the one-year statute of limitations period,
the Commission proposed a forfeiture based only on the unlawful cramming that took place within the 12 months
from the release date of the NAL.
9
Federal Communications Commission FCC 19-25
20. The only evidence LDCB offers as proof that it obtained authorization from consumers to
charge them are its TPV recordings.73 LDCB argues that because its TPV recordings show that LDCB
did not slam consumers, it therefore could not have crammed such consumers.74 As discussed in detail
below, we find that LDCB’s TPV recordings did not comply with the Commission’s verification rules,
which are meant to verify that a consumer previously authorized a carrier change.75 In addition, in this
case, each of the complainants denies that he or she wanted to switch their business’ long distance service
providers to LDCB,76 and many of them allege LDCB’s telemarketer lied to them about who they were
and why they were calling, immediately before the “verification” recording. Thus, based on a
preponderance of the evidence, we affirm the findings in the NAL that LDCB placed unauthorized charges
on 23 consumers’ telephone bills, in violation of Section 201(b) of the Act.77
B. LDCB Violated Section 258 of the Act and Section 64.1120 of the Rules by
Slamming Consumers
21. 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.”78
Section 64.1120 of the Rules prohibits carriers from submitting a request to change a consumer’s
preferred provider of telecommunications services before verifying authorization from the consumer;
carriers can verify that authorization in one of three specified ways, including TPV.79 If a carrier relies on
TPV, the verifier must be independent of the carrier and, among other things, must confirm that the
consumer with whom the verifier is speaking: (i) has the authority to change the carrier associated with
the telephone number in question; (ii) in fact wishes to change carriers; and (iii) understands that he or she
is authorizing a carrier change.80
22. LDCB argues that it did not violate Section 258 of the Act or Section 64.1120 of the
Rules because “the context provided by the sequence of questions contained in LDCB’s TPV script leaves
no room for confusion that consumers authorized a carrier change for regional toll service.”81
Specifically, LDCB argues that its verifier makes a number of statements and asks certain questions to
82
“set the stage” for confirming a carrier change to LDCB for regional toll service. LDCB contends that
the Commission is imposing an “improper burden” on LDCB by requiring the Company to ask a
consumer during the verification process whether he or she authorizes a “carrier change,” rather than a
73 NAL Response at 14.
74 Supplemental NAL Response at 7-8. LDCB contends that the Commission relies on unsworn “self-serving
statements” from complainants which are contradicted by LDCB’s TPV recordings. Id. at 9. As the Commission
has stated on several occasions, it need not rely on sworn statements when enforcing the Act and, as discussed
above, we find the complainants’ statements credible. See supra para. 7.
75 See infra paras. 21-22.
76 As noted in the NAL, in many cases, LDCB did not complete the carrier switch and therefore was not providing
any service to the consumer, yet the Company billed them on a monthly basis anyway. NAL, 30 FCC Rcd at 8670,
para. 19 & n.42.
77 Id. at 8669-70, paras. 17-19.
78 47 U.S.C. § 258(a).
79 47 CFR § 64.1120(c)(1)-(3).
80
Id. § 64.1120(c)(3)(iii).
81 NAL Response at 3.
82 Id. at 4.
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Federal Communications Commission FCC 19-25
“service change.”83 It also contends that its verifier asking consumers if they “also authorize [LDCB] to
provide service for your regional toll calls?” was not misleading as the NAL asserts.84 We disagree. As
discussed above, Section 64.1120(c)(3) of the Rules sets forth detailed procedures for carriers using TPV
to verify consumer authorization. The carrier’s verifier must confirm that the person on the call wants
and authorizes a carrier change—not just an upgrade to existing service, bill consolidation, or any other
transaction, including a change in service.85
23. As we discussed in the NAL, the purpose of the verification procedures is to confirm that
the consumer has authorized a carrier change.86 Verifying authorization to provide “service” is not
87
sufficient to confirm that the consumer wants to make a carrier change. The Commission has explained
that “some carriers introduce ambiguity into what should be a straightforward interaction by describing
the carrier change offer as a mere ‘upgrade’ to existing service or in other ways that obscure the true
purpose.”88
Thus, “the scripts used by the independent third party verifier should clearly and
conspicuously confirm that the subscriber has previously authorized a carrier change.”89 LDCB’s
characterization of the Commission’s findings as “flawed” because the Commission is requiring LDCB to
use the words “carrier change”90 does not persuade us to alter our finding that LDCB’s TPVs did not
comply with these Rules. Providing “context” for the consumer through other questions and statements
does not elicit the consumer’s authorization for a carrier change as the Rules require. As we have stated
on numerous occasions, this rule is crucial to protect consumers particularly where the complainants
contend that they did not intend to change carriers at all.91 We therefore affirm the findings in the NAL
that LDCB violated Section 258 of the Act and Section 64.1120(c)(3) of the Rules by failing to follow all
of the Commission’s third party verification requirements with respect to 15 consumers.
C. LDCB Was Not Denied Due Process
24. LDCB argues that the Commission’s enforcement action against LDCB is “arbitrary and
capricious” and poses “due process problems.”92 LDCB contends that in two orders dating back to 2010,
83 Id. at 2.
84 Id. at 4. In support of its argument, LDCB states that when contacting complainants to discuss their complaints,
the Bureau used a script that referred to “an unauthorized switch of your telephone service.” It therefore maintains
that its verifier’s characterization of the switch on the TPV call as a change in service could not have been
misleading. NAL Response at 5–6. LDCB is confusing excerpts of statements made by staff to consumers in
discussing their slamming complaints (after the slam had occurred and the consumer filed the complaint) with the
specific requirements in the Commission’s rules regarding the verification of a carrier change. The conversations
between Bureau staff and consumers regarding their experiences with LDCB are not relevant to whether LDCB’s
TPVs complied with the Commission’s specific verification requirements at the time of the sales call.
85 47 CFR § 64.1120(c)(3)(iii).
86 NAL, 30 FCC Rcd at 8668-69, para. 14.
87 Id.
88 Implementation of the Subscriber Carrier Selection Changes Provisions of the Telecommunications Act of 1996;
Policies and Rules Concerning Unauthorized Changes of Consumers’ Long Distance Carriers, Fourth Report and
Order, 23 FCC Rcd 493, 501, para. 19 (2008).
89 Id. (quoting Implementation of the Subscriber Carrier Selection Changes Provisions of the Telecommunications
Act of 1996; Policies and Rules Concerning Unauthorized Changes of Consumers’ Long Distance Carirers, Second
Report and Order and Further Notice of Proposed Rulemaking, 14 FCC Rcd 1508, 1553, para. 72 (1998)).
90 NAL Response at 2-4.
91 See, e.g., Silv NAL, 25 FCC Rcd at 5184, para. 12.
92 Supplemental NAL Response at 9-10.
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Federal Communications Commission FCC 19-25
the Commission’s Consumer & Governmental Affairs Bureau (CGB) found a valid authorized carrier
change when analyzing TPV recordings identical to those at issue in the NAL.93 Thus, LDCB contends
that imposing liability on LDCB would violate the Due Process Clause of the Fifth Amendment because
94
the Commission failed to give fair notice that its conduct was unlawful. We disagree. To satisfy the
due process requirements of the Fifth Amendment95 when a punishment is being imposed, the statute or
regulation in question must include standards that can be enforced equitably, as well as “provide a person
of ordinary intelligence fair notice of what is prohibited. . . .”96 In the NAL, the Commission explained
that in each of the TPVs at issue, “LDCB’s verifier asks the person on the call if he or she authorized
LDCB to provide ‘service’ for regional toll calls and at no time confirmed whether he or she authorized a
carrier change for regional toll service.”97 The NAL explained that in 2013, CGB found such language to
98
violate the Commission’s verification procedures. LDCB argues that the 2013 CGB order referenced in
the NAL does not find fault with the particular question cited in the NAL.99 However, the primary point of
the 2013 CGB order, which superseded any prior precedent, was to make clear to LDCB that confirming
a change in service is not the equivalent to confirming a carrier change. Specifically, CGB stated:
The Commission’s rules require that the verification elicit, amongst other things,
confirmation that the person on the call is “authorized to make the carrier change.” In
each of the TPVs at issue, the verifier instead asks the person on the call “are you the
authorized person to have Long Distance Consolidated Billing provide this new long
distance service for the business location?” A switch from one carrier to another carrier
100
differs from merely making changes to the customer’s service.
Consequently, this 2013 CGB order put LDCB on notice that it needed to change its TPVs to bring them
into compliance. We therefore conclude that LDCB was on notice since 2013 that its verification
language violated the Commission’s rules, and we reject its argument that it was denied due process.
25. LDCB further contends that it was denied due process because the Commission relied on
unsworn statements from complainants, rather than on the TPV recordings LDCB produced.101
We
disagree. The NAL was primarily based on consumer complaints the Bureau reviewed—a process similar
93 NAL Response at 6-7.
94 Id. at 7 & n.26.
95 U.S. Const. amend. V (“No person shall be held to answer for a capital, or otherwise infamous crime, unless on a
presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when
in actual service in time of War or public danger; nor shall any person be subject for the same offence to be twice
put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be
deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use,
without just compensation.”).
96 FCC v. Fox Television Stations, Inc., 567 U.S. 239 (2012) (citing United States v. Williams, 553 U.S. 285, 304
(2008)).
97 NAL, 30 FCC Rcd at 8669, para. 15.
98 Id. (citing Long Distance Consolidated Billing Co., Complaints Regarding Unauthorized Changed of Subscriber’s
Telecommunications Carrier, Order, 28 FCC Rcd 3387, 3389, para. 4 (CGB 2013) (granting five complaints) (2013
CGB Order)).
99 NAL Response at 6.
100
2013 CGB Order, 28 FCC Rcd at 3389, para. 4 (footnotes omitted).
101
Supplemental NAL Response at 9-10.
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102
to that used in other recent slamming and cramming investigations. We disagree with LDCB’s
characterization of the violations as “bogus cramming allegations on top of bogus slamming
allegations.”103
LDCB had more than enough information about the complaints upon which the NAL’s
proposed forfeiture was based to allow it to rebut the NAL’s findings and contest the complainants’
assertions in its NAL Response. Nonetheless, the Company did not submit evidence refuting those
complaints. We also considered LDCB’s TPV recordings and determined that they were defective and
invalid for failing to comply with the Commission’s verification procedures. We therefore found, based
on a preponderance of the evidence, that consumers did not authorize LDCB’s service and that LDCB
had, in fact, slammed them.
26. LDCB also questions the fairness of the Commission’s “system” because, according to
LDCB, the Bureau contacted complainants to discuss their complaints, using a script that contains an
“underlying presumption” that the complainant was slammed.104 We disagree. The Bureau initiated its
investigation of LDCB, and the Commission made its apparent findings in the NAL, based on consumers’
statements in their complaints and other evidence in the record regarding LDCB’s switching of
consumers’ carriers and charges it placed on their telephone bills. LDCB possessed all of the complaints;
in fact, LDCB provided many of the complaints in response to the Bureau’s Letter of Inquiry. The
Bureau contacted consumers after reviewing their complaints in an effort to assess the credibility of the
complainants and to gather additional information, such as copies of any telephone bills, or to determine
whether the consumer paid the LDCB bill or received a refund of the LDCB charges.105 For example,
following up on his complaint, S. Yoss of Miller Studios e-mailed the Bureau stating,
I was the person who originally received the call from [LDCB] . . . As I previously
indicated I was lead to believe that the party calling was a representative of Time Warner
Business Class. We have been a long time customer of Time Warner . . . and with our
current contract have unlimited free long distance service within the continental United
States. With this kind of arrangement we would have no reason to change long distance
providers. This has now become a nightmare trying to get the lines back with Time
Warner. As of this writing we have not had long distance service now for four days,
102
See, e.g., Central NAL, 29 FCC Rcd at 5518, para. 3; Advantage NAL, 28 FCC Rcd at 6845, para. 6; United NAL,
27 FCC Rcd at 16500, para. 3; Preferred NAL, 27 FCC Rcd at 16489, para. 2; Silv NAL, 25 FCC Rcd at 5179, para.
2.
103
Supplemental NAL Response at 12.
104
Supplemental NAL Response at 11. LDCB incorrectly states that LDCB obtained information regarding the
Commission’s interactions with complainants due to a Freedom of Information Act request. In fact, after the NAL
was issued, LDCB e-mailed its request for materials evidencing the Bureau’s communications with complainants,
and the Bureau provided the information to LDCB to ensure that the Company had the complete investigative record
in order to respond to the NAL. See Letter from Erica McMahon, Attorney Advisor, Telecommunications
Consumers Division, FCC Enforcement Bureau, to Cheng-yi Liu, Fletcher, Heald & Hildreth, P.L.C., Counsel for
Long Distance Consolidated Billing Company (Aug. 25, 2015) (on file in EB-TCD-14-00017401).
105
For instance, the owner of Hi-Tech confirmed for Bureau staff that LDCB had changed her carrier on three
separate occasions but that the company had received a credit for the unauthorized charges and was no longer being
billed by LDCB. See E-mail from Latashia Middleton, Enforcement Analyst, Telecommunications Consumers
Division, FCC Enforcement Bureau, to Karen Tom, Hi-Tech (Apr. 15, 2015; 18:09 ET) (on file in EB-TCD-14-
00017401 and provided to LDCB). Similarly, the owner of Asset Management Group e-mailed, saying, “[a]ttached
are December through February billings from USBI on behalf of LDCB. They started billing us last July and there
were no charges on our March 2015 AT&T bill. We received a $45 credit on the February billing, so they took us
for $75. I know it’s not a lot of money, but the fact that they represented themselves as AT&T employees is just not
right.” See E-mail from Tom Potter, Asset Management Group, to Erica McMahon, Attorney Advisor,
Telecommunications Consumers Division, FCC Enforcement Bureau (Apr. 21, 2015, 19:18 ET) (on file in EB-
TCD-14-00017401 and provided to LDCB).
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Federal Communications Commission FCC 19-25
which is a big problem for a manufacturing company. My only hope is that something
can be done with this organization, and their ability to scam/slam other companies is
eliminated.106
Mr. Yoss’s e-mail and similar communications from complainants reinforced what they had previously
stated in their complaints. Accordingly, we find that the Commission’s enforcement process has been fair
to LDCB, that LDCB had sufficient information to respond to the NAL’s apparent findings, and that
LDCB was not denied due process.
D. The Forfeiture Amount
27. After considering the evidence in the record, the relevant statutory factors, the
Commission’s Forfeiture Policy Statement,107
and the arguments advanced by LDCB in its NAL
Response, we find that LDCB is liable for a total forfeiture of $2,320,000. As explained in the NAL, the
Commission applied the $40,000 base forfeiture amount to each of the 38 apparent cramming and
slamming violations which resulted in a total forfeiture of $1,520,000.108
The Commission then proposed
to triple the base forfeiture for each of the 11 crams and slams that involved misrepresentations—making
the penalty for each such violation $120,000.109 110
This increased the proposed forfeiture to $2,400,000.
LDCB argues that the Commission’s proposed forfeiture of $2,400,000 is excessive, that LDCB is unable
to pay the forfeiture, and that “a substantial reduction of the proposed forfeiture is necessary to account
for LDCB’s size and inability to pay.”111 We disagree for the reasons set forth below.
28. Section 503(b)(1) of the Act provides, in relevant part, 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.112
In this case, Section
503(b)(2)(B) of the Act and Section 1.80 of the Rules authorized the Commission to assess a forfeiture of
up to $160,000 for each violation, or each day of a continuing violation, up to a statutory maximum of
$1,575,000 for a single act or failure to act by common carriers.113 In exercising our forfeiture authority,
we are required to take into account “the nature, circumstances, extent, and gravity of the violation and,
106
E-mail from S. Yoss, Miller Studios, to Mika Savir, Attorney Advisor, Telecommunications Consumers
Division, FCC Enforcement Bureau (Oct. 31, 2014, 17:02 ET) (on file in EB-TCD-14-00017401 and provided to
LDCB).
107
See Forfeiture Policy Statement, 12 FCC Rcd at 17100, para. 27.
108
NAL, 30 FCC Rcd at 8671, para. 21.
109
Id. at 8672, para. 22.
110
Id.
111
NAL Response at 15-16.
112
See 47 U.S.C. § 503(b)(1)(B); see also 47 CFR § 1.80(a)(2).
113
See 47 U.S.C. § 503(b)(2)(B); 47 CFR § 1.80(b)(2). Although the Commission most recently adjusted its
penalties to account for inflation in 2018, here we apply the adjusted penalties in effect at the time the NAL was
issued. See Amendment of Section 1.80(b) of the Commission’s Rules, Adjustment of Civil Monetary Penalties to
Reflect Inflation, Order, 28 FCC Rcd 10785 (EB 2013). Accordingly, these amounts reflect the 2013 inflation
adjustments to the forfeitures specified in Section 503(b)(2)(B) ($100,000 per violation or per day of a continuing
violation and $1,000,000 per any single act or failure to act). The Federal Civil Penalties Inflation Adjustment Act
of 1990, Pub. L. No. 101-410, 104 Stat. 890, as amended by the Debt Collection Improvement Act of 1996, Pub. L.
No. 104-134, Sec. 31001, 110 Stat. 1321 (DCIA), requires the Commission to adjust its forfeiture penalties
periodically for inflation. See 28 U.S.C. § 2461. The Commission most recently amended its relevant rules on
January 5, 2018, effective February 1, 2018. See Amendment of Section 1.80(b) of the Commission’s Rules,
Adjustment of Civil Monetary Penalties to Reflect Inflation, Order, DA 18-12, 33 FCC Rcd 46 (EB 2018); see also
Adjustment of Civil Monetary Penalties to Reflect Inflation, 83 Fed. Reg. 4600-01 (Feb. 1, 2018).
14
Federal Communications Commission FCC 19-25
with respect to the violator, the degree of culpability, any history of prior offenses, ability to pay, and
114
such other matters as justice may require.” The Commission carefully considered these factors in the
115
NAL, and we do so again here.
1. A Reduction in the Forfeiture is Appropriate for Two of the Slamming
Violations
29. Section 503(b)(6) of the Act authorizes the Commission to assess a forfeiture for
116
violations that occurred within one year preceding the issuance of an NAL. LDCB argues that the
violations associated with five complainants occurred prior to the one-year statute of limitations period
and thus, no forfeiture may be imposed for those violations.117 Specifically, LDCB asserts that its
marketing calls (and thus the misrepresentations made by LDCB’s telemarketers) for three complainants
occurred before July 30, 2014, the date that is one year prior to the release date of the NAL, and thus were
outside of the one-year statute of limitations. LDCB also asserts that the dates on which the Company
submitted the carrier change requests for two complainants were more than one year prior to the issuance
of the NAL.118
pon further review of the evidence in the record, we agree with LDCB that the slams it
30. U
perpetrated on Just Glocks, Inc. and
occurred more than a year before the
release of the NAL. While we find that LDCB submitted the requests to change the carriers of Just Glocks
and without the businesses’ authorization verified in compliance with the Rules, it did
so outside of the Commission’s one-year statute of limitations period; thus, we cannot assess forfeitures
associated with those two violations.119
We therefore reduce the proposed forfeiture by $80,000, resulting
in an amount of $2,320,000.
31. We find, however, that the timing of the Section 201(b) misrepresentation violations
associated with the complaints filed by Controlled Hydronics, Your T-Shirt Man, and Mabel’s, LLC,
have no bearing on our assessment of the underlying proposed forfeiture for those complaints. As
explained in the NAL, the Commission proposed the base forfeiture amount of $40,000 for each slam and
cram by LDCB.120
Controlled Hydronics was crammed on September 1, 2014; Your T-Shirt Man was
crammed on September 22, 2014; and Mabel’s, LLC was crammed on February 19, 2015 (all within the
one-year statute of limitations). The Commission did not propose a separate forfeiture for LDCB’s
misrepresentations associated with the complaints; rather, the Commission upwardly adjusted the base
forfeiture to account for the Company’s deceptive marketing conduct.121 In fashioning the penalty to
apply for LDCB’s slamming and cramming violations, the Commission took into account the Company’s
misconduct that occurred at earlier times.122
114
47 U.S.C. § 503(b)(2)(E). See 47 CFR § 1.80(b)(4); Forfeiture Policy Statement, 12 FCC Rcd at 17100-01, para.
27.
115
NAL, 30 FCC Rcd at 8670-72, paras. 20-22.
116
47 U.S.C. § 503(b)(6).
117
NAL Response at 9-10 & Exh. I.
118
Id.
119
The NAL also found that LDCB crammed charges onto the telephone bills of Just Glocks within the one-year
statute of limitations period; thus, the Commission can assess a forfeiture for the Section 201(b) cramming violation
associated with the Just Glocks complaint.
120
NAL, 30 FCC Rcd at 8671, para. 21.
121 Id. at 8672, para. 22.
122 See Sandhill Communications, Notice of Apparent Liability for Forfeiture, 25 FCC Rcd 17762, 17769 & n.45
(EB 2010) (“Section 503(b)(6) does not . . . bar the Commission from assessing whether . . . conduct prior to [the
(continued….)
15
Federal Communications Commission FCC 19-25
129
require.” As explained in the NAL, we find LDCB’s actions egregious, as evidenced by the fact that it
repeatedly deceived consumers in order to facilitate changing their preferred long distance providers
without authorization verified in compliance with the Commission’s rules and placing unauthorized
130
charges for its service on consumers’ telephone bills. In 11 of the complaints included in the NAL,
LDCB misled consumers to believe that the Company was calling on behalf of the consumers’ current
carriers. Additional consumers alleged similar deceptive misconduct by LDCB that occurred prior to the
time period covered by the NAL.131
LDCB received these consumer complaints, yet the record shows that
the Company took little action to correct the deceptive behavior or terminate its relationship with the
telemarketing company. The complaints regarding LDCB’s deceptive marketing spanned the course of
over a year; therefore, it appears that LDCB was aware of and benefited financially from its
telemarketers’ acts. We have found this same type of willful and repeated use of deceptive marketing
132
practices to be particularly egregious in other investigations. LDCB was on notice that such
misrepresentations to consumers may result in substantial forfeiture amounts.133 In addition, we must
consider the substantial harm LDCB caused consumers. LDCB forced consumers to spend significant
time and energy to return to their preferred carriers, obtain refunds to which they were entitled, and
respond to collections agencies.134
34. Finally, we must consider LDCB’s history of noncompliance. In 2005, the Bureau
initiated an investigation of LDCB based on complaints from consumers who alleged LDCB had changed
their preferred carriers without authorization.135
The Bureau subsequently entered into a consent decree
with LDCB, which was signed by LDCB’s President Jan Lowe, requiring that LDCB’s sales
representatives will make no misleading statements to consumers and that its sales scripts will alert the
136
consumers that their long distance service providers will be changed. The same type of slams by
LDCB in 2005 are also at issue here, revealing a pattern of violations by LDCB. That the conduct by
LDCB at issue in this enforcement action was expressly prohibited in the 2006 consent decree137
is
evidence that LDCB’s conduct is egregious, continuous, and repeated.
129
47 U.S.C. § 503(b)(2)(E). See 47 CFR § 1.80(b)(4); Forfeiture Policy Statement, 12 FCC Rcd at 17100-01, para.
27.
130
See Preferred Forfeiture Order, 30 FCC Rcd at 13725, para. 29 (finding the company’s actions egregious, as
evidenced by the fact that it repeatedly engaged in misrepresentation and changed consumers’ preferred long
distance providers without properly verifying their authorization).
131
See consumer complaints on file in EB-TCD-14-00017401.
132
See, e.g., Central Forfeiture Order, 31 FCC Rcd at 10408-09, paras. 40-41; CTI Forfeiture Order, 31 FCC Rcd at
10451-54, paras. 39-42; Preferred Forfeiture Order, 30 FCC Rcd at 13725, para. 29; United NAL, 27 FCC Rcd at
16505-06, paras. 17-18 (finding the company’s deceptive conduct particularly egregious because it repeatedly
misled consumers into believing it was calling on behalf of their current carriers); Silv NAL, 25 FCC Rcd at 5186,
para. 16 (finding company’s conduct particularly egregious in light of the misrepresentations made by the
company’s telemarketers).
133
See Preferred NAL, 27 FCC Rcd 16489, 16494-95, paras. 14-15; United NAL, 27 FCC Rcd at 16505-06, paras.
17-18; Silv NAL, 25 FCC Rcd at 5186, para. 16.
134
See, e.g., Main Street NAL, 26 FCC Rcd at 8859, 8861, paras. 19-20, 24 (in calculating the proposed forfeiture
the Commission considered the difficulty consumers experienced in attempting to obtain refunds).
135
See Long Distance Consolidated Billing Co., Verification of Orders for Telecommunications Service, Order and
Consent Decree, 21 FCC Rcd 11907 (2006) (on file in EB-04-TC-147).
136
Id. at 11910, paras. 8-9.
137
Id. at 11910-11, paras. 8-13.
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Federal Communications Commission FCC 19-25
35. We have previously rejected inability to pay claims in similar cases where it is
outweighed by a pattern of recurring misconduct or otherwise egregious violations.138 In such cases,
139
forfeitures must also be sufficient to protect the interests of consumers and deter future violations.
Carriers cannot expect that paying forfeitures will simply be the cost of doing business. This is the
second time the Commission has had to expend resources to investigate and address egregious
misconduct by LDCB. Therefore, in light of LDCB’s egregious and repeated misconduct of the same
rules that were the subject of the 2006 consent decree, a higher forfeiture relative to LDCB’s gross
revenues is warranted.
36. Accordingly, after weighing the various factors described above, we determine that the
forfeiture proposed in the NAL should be adjusted as discussed above, and we assess a forfeiture of
$2,320,000 for LDCB’s willful and repeated violations of Sections 201(b) and 258 of the Act and Section
64.1120 of the Rules. We find that, based on the evidence in the record, the amount appropriately reflects
the nature, circumstances, extent, and gravity of LDCB’s violations, as well as its history of prior
offenses. Notwithstanding the arguments advanced by LDCB, we find that the statutory factors were
appropriately applied in this case. Our decision not to downward adjust based on inability to pay is
consistent with prior precedent140
and reflects the circumstances present in this case.
IV. CONCLUSION
37. Based on the record before us and in light of the applicable statutory factors, we conclude
that LDCB willfully and repeatedly violated Sections 201(b) and 258 of the Act and Section 64.1120 of
the Rules by changing the preferred carriers of 15 consumers without authorization verified in accordance
with the Commission’s verification procedures; charging 23 consumers for service without authorization,
and, in 11 of those instances, making misrepresentations to the consumers. Accordingly, we assess a
forfeiture of $2,320,000.
V. ORDERING CLAUSES
38. Accordingly, IT IS ORDERED that, pursuant to Section 503(b) of the Act,141
and
Section 1.80 of the Rules,142
Long Distance Consolidated Billing Company IS LIABLE FOR A
MONETARY FORFEITURE in the amount of two million three hundred twenty thousand dollars
($2,320,000) for willfully and repeatedly violating Sections 201(b) and 258 of the Act and Section
64.1120 of the Rules.
39. Payment of the forfeiture shall be made in the manner provided for in Section 1.80 of the
Rules within thirty (30) calendar days after the release date of this Forfeiture Order.143 If the forfeiture is
138
See, e.g., CTI Forfeiture Order, 31 FCC Rcd at 10454, para. 43; Central Forfeiture Order, 31 FCC Rcd at 10411,
para. 44; USTLD Forfeiture Order, 31 FCC Rcd at 10433, para. 43 (each rejecting inability to pay claims in light of
the carriers’ egregious misconduct which included slamming, cramming, and deceptive marketing); Purple
Communications, Inc., Forfeiture Order, 30 FCC Rcd 14892, 14903-904, paras 32-33 (2015) (acknowledging that
“standing alone, Purple’s financial documents might support a reduction” but finding after applying the balancing
factors no reduction was warranted).
139 See, e.g., Advantage Forfeiture Order, 32 FCC Rcd at 3736-37, para. 34; NOS Communications, Inc., Notice of
Apparent Liability for Forfeiture, 16 FCC Rcd 8133, 8142, para. 19 (2001) .
140
See, e.g., Abramovich Forfeiture Order, 33 FCC Rcd at 4680, para. 48; CTI Forfeiture Order, 31 FCC Rcd at
10454, para. 43; Central Forfeiture Order, 31 FCC Rcd at 10411, para. 44; USTLD Forfeiture Order, 31 FCC Rcd
at 10433, para. 43.
141 47 U.S.C. § 503(b).
142 47 CFR § 1.80.
143 Id.
18
Federal Communications Commission FCC 19-25
not paid within the period specified, the case may be referred to the U.S. Department of Justice for
enforcement of the forfeiture pursuant to Section 504(a) of the Act.144
40. 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. Long Distance
Consolidated Billing Company shall send electronic notification of payment to Lisa Williford at
lisa.williford@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.145 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 that should be followed based
on the form of payment selected:
Payment by check or money order must be made payable to the order of the Federal