Rules Take Effect to Help Victims of Phone ‘Slamming’

Phone customers who have their long-distance carrier switched without their permission will have their cases resolved faster and receive greater compensation under new federal rules that take effect today.

Consumers hit by the widespread but illegal practice, known as “slamming,” will be automatically absolved of all long-distance charges incurred within 30 days of being switched to an unauthorized provider. And customers who unwittingly pay bills from the rogue carrier will be given a refund or a credit on future bills through their authorized long-distance company.

The new rules step up the punitive costs of slamming by requiring companies that steal long-distance customers to pay 150% of the collected long-distance charges to the rightful carrier.

“One thing’s for sure, it’s not going to be profitable to slam after this goes into effect, because if the rules are enforced correctly, all the financial incentives go away,” said James Bradford Ramsay, assistant general counsel for the National Assn. of Regulatory Utility Commissioners (NARUC), a Washington, D.C.-based group that represents state regulators.

State regulators, through NARUC, have pressed hard for more stringent federal anti-slamming regulations to help prevent slammers from simply moving from one state to another to continue their illegal conduct.

Although most violations go unreported, slammers hit up to 1 million callers each year, often billing unsuspecting consumers sharply higher fees and rates than those available through their selected provider.

Their methods range from outright fraud, such as forging a customer’s signature on an agreement, to various forms of trickery, such as gaining signatures on sweepstakes entries that include fine print approving a switch to a certain long-distance company.

As part of the new enforcement effort, the Federal Communications Commission will allow states to enforce the new rules alongside their existing laws. So far, 30 states have signed on to take over enforcement of the FCC’s new rules, but California is not one of them.

“These are good rules, it’s just a matter of whether we want to proceed with these rules or design our own that are consistent with the FCC’s policies,” said Linda Serizawa, consumer protection advisor to California Public Utilities Commission member Carl Wood. “We are still considering what we want to do.”

For now, Californians who have been slammed will be automatically referred to the FCC to file a complaint, but may also file a separate complaint with state regulators.

Long-distance companies have fought the new rules at every step. When the FCC first proposed tougher anti-slamming measures in late 1998, a court challenge by MCI WorldCom successfully stalled the FCC’s new rules. MCI WorldCom, AT&T;, Sprint and others proposed an alternative that would have shifted nationwide slamming enforcement to an outside group controlled by the carriers themselves.

The FCC rejected that plan, and later adopted strict rules that take effect today. AT&T; filed a lawsuit challenging the FCC’s new regulations in federal court, calling the new anti-slamming rules “arbitrary and capricious.”

Although many of the most egregious offenders have been lesser-known long-distance carriers, the nation’s largest companies--including MCI WorldCom and AT&T--have; been repeatedly fined for slamming violations.