FCC, Slam Door on This Idea

The most widespread consumer fraud in the telephone business is committed by the phone companies themselves. It’s called slamming and involves an unauthorized switching of a customer’s long-distance carrier.

All the states have laws against slamming, and federal authorities have adopted rules to give consumers greater protection. The phone companies, however, are campaigning to replace federal rules with their own “voluntary” consumer protection system. That’s right, the companies that defraud their customers want to appoint themselves as the policemen of such practices. As suspect as this plan looks to consumers, the Federal Communications Commission is considering it as a substitute for its own rules. It should reject the scheme.

Slamming, which has been illegal since the 1930s, has become one of consumers’ biggest headaches. The number of complaints to state authorities nearly doubled between 1996 and 1998 to more than 20,100, and penalties against the companies have reached millions of dollars. It is spreading to the local phone carriers as competition in that area begins to heat up. The FCC has adopted several rules against slamming, but its latest regulation, designed to take the phone companies’ profits out of slamming, was suspended by a federal appeals court to give the agency a chance to consider the industry’s voluntary plan.

That plan would have consumer complaints handled by a “third-party administrator,” a contractor controlled by a board of directors representing the participating phone companies. The scheme would limit compensation to slamming victims, which the FCC rules don’t, and would keep a check on repeat complainers, ostensibly to deter customer frauds against the phone companies. Worse, it would not start from the presumption, as an FCC rule does, that a consumer’s slamming complaint is justified.

Consumer groups, state regulators and some legislators are strongly opposed to the industry scheme, and justifiably so. It would amount to asking the fox to guard the henhouse. The FCC should reject the industry plan and quickly implement its own rules.

To Take Action: E-mail FCC Chairman William Kennard: bkennard@fcc.gov or write to FCC, 445 12th St. S.W., Washington, D.C. 20554. Mention “The implementation of the subscriber carrier selection changes provisions of the Telecommunications Act of 1996,” CC Docket No. 94-129, FCC 98-334.