Poor monitoring by federal and state phone regulators has led to a massive wave of "slamming" -- the unauthorized switching of consumers' long-distance service. This conclusion, the subject of a congressional report released Thursday, gives new impetus to legislative efforts to crack down on the fraudulent practice.
The General Accounting Office said slamming flourished in part because responsibility for stopping the practice was splintered among state regulators, the Federal Communications Commission, and telephone companies. "Each really relies on the other to be the main force in anti-slamming efforts," Eljay Bowron, the GAO's assistant comptroller general for special investigations, told a Senate subcommittee hearing on Thursday.
The report by the GAO, the investigative arm of Congress, prompted a pledge for stronger enforcement and tighter rules from the nation's top phone regulator, FCC Chairman William Kennard. But several lawmakers questioned Kennard's assurances and said they would push for legislation to increase fines and create criminal penalties for intentional, fraudulent slamming.
The FCC alone received almost 20,000 slamming complaints in the first three months of the year and state regulators have received thousands more. Sometimes the unauthorized service change is the result of an administrative error, but in many cases small firms have used fraudulent and deceptive means to engineer a slam.
On Tuesday, the FCC fined the Fletcher Companies US$5.7 million for slamming thousands of consumers over the past few years.
Kennard said his agency was considering new rules to get tough on slamming and reduce the economic incentive for big phone companies to allow unauthorized switches. One FCC proposal under consideration would let consumers not pay anything for calls made for one or two months after an unauthorized service switch. The agency also plans to meet with local telephone carriers next month in an effort to develop further anti-slamming measures, Kennard said.
Senator Susan Collins (R-Maine) has introduced legislation, co-sponsored by Senator Richard Durbin (D-Illinois), that would increase fines and create criminal penalties for slamming. The proposal also would allow consumers to pay their original carrier for calls made after the unauthorized service switch.
The GAO report shed new light on the Fletcher case, which involved slamming by eight companies all owned by Daniel Fletcher, who is thought to have fled the country. In one scheme, Fletcher sent consumers sweepstakes entry forms that also contained, in small print, authorization to switch long-distance service. That violated FCC rules against placing other offers on an authorization form, known as a Letter of Agency.
In 1996, AT&T Corp. had questioned many of the authorizations for switching service it received from Fletcher, but decided to continue doing business with his company. Last month, however, AT&T announced a series of voluntary measures to curb slamming.
