A grand slam: Crackdowns aim to stop local fraudulent practices

Slamming, the unauthorized switching of a customer's telephone service, has long plagued the cut-throat long-distance industry. Now the problem is spreading to local and toll service, too.

As federal regulators consider stiffer penalties, a number of states are cracking down on a variety of unethical and fraudulent marketing practices. Congress has introduced at least four anti-slamming bills, and telcos are devoting more resources to the problem.

"It's a manifestation of new competition," said Bob Rowe, a Montana public service commissioner who heads the communications committee of the National Association of Regulatory Utility Commissioners.

The Federal Communications Commission received 16,363 slamming complaints in 1996-41% of all complaints and a 1001% increase in slamming complaints since 1991. Although the agency does not track complaints by type of service, experts say slamming is starting to invade local and toll service as those markets are opened to competitors.

"It's not a trend yet, but it's on our radar screen," said a spokesman for U S West. "We're seeing spotty incidents in our 14-state region. It pales in comparison to long-distance slamming." Total slamming complaints more than doubled in eight months-to 40,000 as of August.

The FCC is implementing rules that would make slamming of local service a violation. As it stands, slammers can be punished at the federal level only if they switch long-distance service without a customer's consent or knowledge.

So far, the FCC has assessed nearly $1.8 million in penalties against 15 companies for slamming. Perpetrators range from little-known resellers to industry stalwarts. About 15% of carriers account for 75% of all slamming disputes, according to officials at SBC Communications.

Slammers' tactics are getting more aggressive as competition grows, the telcos say.

The traditional come-ons-a promotional check or contest-entry form whose small print allows a change in phone provider-aren't enough anymore. Now some telemarketers fraudulently claim they are calling on behalf of a local telco and need permission to simplify a customer's phone bill.

"Even more disturbing is that some of these calls are becoming abusive and threatening," John Scully, Colorado vice president of U S West, testified recently before a Senate subcommittee. Special targets include senior citizens, small businesses and minorities, studies show.

Some states and local telcos complain that the FCC hasn't enforced its anti-slamming rules aggressively enough. The agency has gathered comments on how to eliminate the problem and is expected to issue new, tougher rules.

Currently, a long-distance carrier must get end users' written consent, and verify it, before switching providers. If users are slammed, their local telco must switch them back to the original provider at no charge. Violators must rerate calls so users pay no more than they would have paid if service hadn't been changed. Local telcos must rebate any one-time switching fees.

In addition, the Telecommunications Act of 1996 requires that payments made for all calls during the "slammed" period be returned to the original carrier. U S West and others complain that the FCC isn't enforcing this provision and that the money is staying with the slammers.

Both U S West and SBC suggest fining slammers according to what percentage of their total change orders are disputed.

Until new rules are made, telcos must devote more staff time to slamming complaints. U S West, for example, has 60 employees dedicated to performing change orders. "Increasingly, a bigger part of their day is untangling the knots made by slamming," a spokesman said.

FCC CHIEF ENDS TENURE

The commissioners aren't the only ones leaving the Federal Communications Commission. FCC Chief of Staff Blair Levin announced his resignation, effective Oct. 30, to pursue a private sector job. Levin is the longest-serving chief of staff in FCC history, according to the FCC. He's been on the job since December 1993.

AT&T's DOMINANCE CONTINUES TO SLIDE

AT&T's share of the long-distance market continues to erode, shows a recent report by the FCC. AT&T accounted for 51% of all interstate switched minutes in mid-1997, down from more than 80% in late 1984. The company's traffic also grew more slowly-while AT&T's minutes more than doubled between mid-1984 and mid-1997, other carriers' grew almost tenfold.