Getting Tough With Smooth Long-Distance Operators
IT is the most brazen abuse of telephone customers the Federal Communications Commission (FCC) has encountered. A small Maryland firm, seeking to boost business, decided to go after long-distance service for pay phones at 94 bus and subway stops in New York.
Only trouble is, no one bothered to tell New York transit authorities, owners of the phones, according to an FCC complaint. Instead, Oncor Communications Inc. simply notified Nynex, the local telephone company, to switch the Metropolitan Transportation Authority's long-distance lines to its own.
Once it learned of the move, MTA asked Nynex to restore its original service. But, according to the complaint, Oncor switched accounts again.
The practice of switching phone service without customers' consent, called slamming, is commonly used by companies trying to make it in the brutally competitive long-distance market.
Now, in response to thousands of consumer complaints, the FCC is moving to crack down on the practice - though critics say it is still not going far enough.
Until now, what is considered misconduct by long distance carriers - and the penalties attached - have been unclear.
But the FCC hopes to change all of that with a new set of rules it will enforce on Sept. 11:
* Telemarketers and long distance carriers may not issue instructions to local telephone companies to switch long distance accounts without providing convincing evidence of customer compliance. This could include an oral OK, verified by a third party or written permission.
* Promotion materials must be marked in clear terms, and in readable print. Deceptive language and fine print - such as those appearing on contest entries, prize giveaways, and checks - will not be tolerated.
* Slammers will be held accountable for the extra costs incurred by customers due to their unwitting change to other carriers.
The FCC recently responded to the Oncor case by slapping the Bethesda company with a $1.41 million fine, a punishment representing a $15,000 forfeiture for each of the 94 slamming incidents.
But this action is one of only a handful of fines the federal agency has imposed on slammers. The first, against Cherry Communications in Westchester, Ill., last year, resulted in what the FCC calls a ''voluntary contribution'' of $500,000 to the US Treasury and ''voluntary changes in marketing practices.'' The company did not admit wrongdoing, however, and continues to operate.
Consumers charge the FCC has no teeth. They want more than damages assessed after the fact, and rules designed to prevent the problem.
They want a law to stop the fraud from continuing by requiring a company to obtain a signed agreement from any customer it claims has switched from another long-distance carrier to be its client.
But long-distance sellers say telemarketing and mailings account for their success in making some 25 million switches a year - the vast majority of them with the customers agreement - says Kathleen Wallman, chief of the FCC's common carrier bureau, which oversees long-distance service.
''We're trying to strike a balance between convenience and security,'' she adds, explaining why the FCC refuses to mandate written consent. ''One of the things consumers can do is enter a 'pick freeze' by calling up their local phone companies and say 'I don't want you to switch without me telling you directly.'''
The biggest problems come from firms like Oncor, ''out to make a quick buck, and once they're found out, they leave a state under pursuit by consumer groups and prosecutors,'' says Bradley Stillman of the Consumer Federation of America.
But Donna Kelley Birchard, long loyal to Sprint, was slammed by AT&T earlier this year. She wanted to explore the cost effectiveness of switching, but never made a commitment to do so.
If companies were required to submit written proof of a consumer requested switch, she would have been spared the cost and time involved - a month of annoying phone calls to and from insistent marketers.
''When we're seeing a real problem, we can open up an investigation and do a rule making,'' says an FCC official. ''For example, the sweepstakes are not necessarily against our rules, but after we see practices we don't like, we can change the rules'' to try to eliminate those practices.
Tighter boundaries on companies' marketing strategies are the only way competition is going to benefit the consumer, says Ms. Birchard. ''There needs to be a cooling off in this war to get consumers,'' she says. ''Because, given companies' sales quotas and bottom lines, their approach is 'get 'em - and let the consumer beware!'''