FCC Gives States Powers to Fight Phone ‘Slamming’

Hoping to clamp down on the nation’s most common form of phone fraud, federal regulators on Thursday renewed their push for tougher regulation by giving states more enforcement powers to fight “slamming,” the practice of switching a caller’s long-distance company without permission.

The move by the Federal Communications Commission formally quashes a controversial plan that would have placed nationwide slamming enforcement in the hands of a third-party group controlled by the long-distance carriers themselves.

“This is good news for consumers all across the country,” said Pam Nelson, a state regulator in North Dakota who serves on a nationwide committee on consumer affairs. “It’s nice to know consumers can still win against the powerful special interests.”

About 50 million people a year change their long-distance providers, often lured by discount rates or new calling plans. Most switches are carried out without dispute, but some changes are made illegally by companies that either trick customers into switching or steal customers away using fabricated documentation.

By one estimate, slamming hits up to 1 million callers each year, but official estimates are substantially lower because most consumers don’t report the incident.

Slamming accounts for the bulk of all complaints at the FCC, with 21,868 incidents reported in 1999. California’s Public Utilities Commission logged a peak of 100,000 slamming complaints in 1998, but the rate has been dropping since then because of stepped-up enforcement actions.

After being approached by regulatory agencies in 35 states, the FCC decided that state utility commissions--rather than long-distance carriers or third parties selected by them--should resolve slamming disputes.

Under the new rules, a company caught slamming will be required to reimburse the authorized carrier 150% of the unauthorized charges it received from the consumer. The authorized carrier will, in turn, reimburse the consumer 50% of the charges the consumer paid to the slammer.

In passing the revised rules, the FCC said it would resolve slamming disputes arising in states that do not have a utility commission with authority over the phone industry.

“I think with this order, and with our increased enforcement in this area, we will eradicate slamming in this country, and that will be a good thing,” FCC Chairman William Kennard said.

A spokesman for MCI WorldCom said the FCC’s new plan would create a patchwork of regulations that could cause problems for the industry. He said the states should work on standardizing their rules.

One consumer group, meanwhile, gave the FCC’s latest move mixed reviews.

“This is a pro-consumer position . . . and it’s about time the FCC came out with these new rules,” said Samuel Simon, chairman of the Telecommunications Research and Action Center, a group that rates long-distance service. “[But] we are very concerned with the FCC’s decision to have individual states handle slamming complaints on interstate long-distance carrier issues.”