Originally created 04/24/98

Regulators said not protecting phone users from 'slamming'

WASHINGTON -- Telephone customers are not being adequately protected by the government from the illegal practice of "slamming" -- the unauthorized switching of a person's long-distance company -- a report to Congress concludes.

The General Accounting Office, which is the investigative branch of Congress, found that neither federal anti-slamming regulations administered by the Federal Communications Commission, nor state rules, are effective.

Sen. Susan Collins, R-Maine, ordered the report, which was a focal point of a hearing today in the Senate permanent subcommittee on investigations, which Collins chairs. "To me, deliberate slamming is like stealing and it should not be tolerated," Collins said.

"We think we can be faster. We think we can hit them (slammers) harder and we're going to do that," said the FCC's John Nakahata, chief of staff to commission Chairman William Kennard. The FCC is expected to adopt tougher anti-slamming rules in a few weeks.

The report also said the FCC wasn't doing enough to try to prevent bad actors from getting into the long-distance business.

"We found no effective anti-slamming effort to keep unscrupulous individuals from becoming a long-distance provider," the GAO report said. "For example, the FCC does not review information submitted to it in tariff filings that may alert it to unethical applicants." Tariffs are lists of prices and services companies provide the agency.

But Nakahata countered: "The GAO is shooting at the wrong game. There is nothing about a tariff that tells you whether this is a good provider or a bad provider. What's relevant is how the companies sell the service, which you won't find in the tariff."

Companies are not required to get an operating permit from the FCC to sell long-distance service within the United States, Nakahata said. While long-distance companies are required to file tariffs to the commission about their services and their rates, they generally go into effect without the FCC taking any action.

The GAO said it filed a tariff to provide long-distance service through a made-up company called PSI Communications. "In short, although we submitted fictitious information for the tariff and did not pay FCC's required $600 application fee, we received FCC's stamp of approval."

The most effective way for people to protect themselves from slamming is to contact their local phone company and ask them to "freeze" their preferred long-distance company from being changed, the GAO report said.

Customers can lift the freeze by contacting their local phone company, which keeps records of customers' preferred long-distance provider.

In 1997, the FCC received more than 20,000 slamming complaints -- its single largest number of telephone-related complaints.

The GAO report also said the "FCC takes an inordinate amount of time ... to identify companies that slam consumers and to issue orders for corrective actions (i.e., fines, suspensions) or to bar them form doing business altogether."

As a case in point, the GAO cited the Fletcher Cos., a group of long-distance companies that the FCC fined more than $5 million on Tuesday for slamming.

The GAO said the Fletcher Cos. began slamming people on a widespread basis in 1995, but the FCC didn't begin to take action against the company until June 1997.

Nakahata conceded the FCC could act more swiftly and that it will.

Collins, a two-time slamming victim, has offered a bill that would attempt to crack down on slamming.

"Victims of slamming are frustrated," she said. "They do not believe that they should spend their time and energy resolving problems that are not of their own making."

Collins' bill would, among other things: increase fines against companies that slam; require local phone companies to report a summary of slamming complaints to the FCC for investigation; and require the FCC to report to Congress on whether its current procedures contain sufficient safeguards to prevent unscrupulous phone companies from receiving operating authority from the FCC.


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