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NATIONAL ASSOCIATION OF STATE UTILITY CONSUMER ADVOCATES
RESOLUTION

Urging that Congress and the FCC
Protect Consumers from the Fraudulent Transfer
of Their Long Distance Service Provider
WHEREAS, the telecommunications industry has moved toward competition in the long distance market, and long distance companies have intensified marketing efforts in an attempt to gain market share;

WHEREAS, the fluid nature of the long distance market has also allowed an increasing number of fraudulent transfers to occur. Such transfers have been termed "slamming", which constitutes any practice that changes a consumers long distance carrier without the consumer's knowledge or consent;

WHEREAS, slamming is now the largest single consumer, complaint received by many state consumer advocates, and as many as one million consumers are fraudulently transferred annually to a provider which they have not chosen;

WHEREAS, the increased costs which consumers face as a result of these fraudulent switches threaten to rob consumers of the financial benefits created by a competitive marketplace;

WHEREAS, many companies use false third party verification, in conjunction with fraudulent and deceptive telemarketing practices, as the basis for verifying customer authorization to change long distance service providers;

WHEREAS, many companies use negative option schemes, in conjunction with fraudulent and deceptive marketing tactics, as the basis for verifying customer authorization to change long distance service providers;

WHEREAS, many companies engage in fraudulent "bait and switch" tactics to lure customer authorization to change long distance service providers;

WHEREAS, the Telecommunications Act of 1996 sought to combat slamming by directing that any revenues generated by fraudulent transfer be payable to the company which the consumer has expressly chosen, not the fraudulent transferor. Recently the Federal Communication Commission has exercised its proper authority to implement this rule. Eliminating the financial incentive to slam will reduce this problem;

WHEREAS, the Federal Communications Commission has not been able to effectively deter the practice of slamming due to a lack of prosecutorial resources as well as the difficulty of proving that a provider failed to obtain the consent of the consumer prior to acquiring that customer as a new customer. Commission action to date has not adequately protected consumers;

WHEREAS, the majority of consumers who have fraudulently denied the services of their chosen long distance carrier do not turn to the Federal Communications Commission for assistance. Indeed, section 258 of the Telecommunications Act of 1996 directs that the State commissions shall be able to enforce regulations mandating that the consent of a consumer be obtained prior to a switch of service;

THEREFORE BE IT RESOLVED that NASUCA supports legal requirements that prohibit telecommunications carriers from submitting or executing a change in a subscriber's selection of their telephone service provider unless the carrier has been obtained from the subscriber written authorization, or in the case of oral authorization, verifiable proof of the customer's authorization;

BE IT FURTHER RESOLVED, that NASUCA supports the requirement that the customer must receive prompt written conformation of the pending change in service provider, including disclosure of all rates, terms and conditions, and notification of right to cancel;

BE IT FURTHER RESOLVED, that NASUCA urges Congress to provide the Federal Communications Commission, law enforcement, consumers, and consumer agencies with the ability to efficiently and effectively prosecute those companies which slam consumers, by mandating the recording and maintenance of evidence concerning the consent of the consumer to switch carriers, including a requirement of legitimate third-party verification, establishing higher civil fines for violations, providing by law for slammed consumers to be exempt from any payment requirement, and establishing a civil right of action against fraudulent providers, as well as criminal sanctions for repeated and willful instances of slamming;

BE IT FURTHER RESOLVED, that any legislation passed by Congress should not preempt or limit the ability of the states to require additional consumer protections that each state may determine is appropriated for its citizens; and

BE IT FURTHER RESOLVED, that NASUCA authorizes its Executive Committee to develop specific positions and to take appropriate actions consistent with this resolution. The Executive Committee shall advise the membership of any proposed action prior to taking action if possible. In any event, the Executive Committee shall notify the membership of any action pursuant to this resolution.

Approved by NASUCA:

Boston, Massachusetts
Place

November 11, 1997
Date

Submitted by:

NASUCA Telecommunications Committee

Martha Hogerty (MO), Chair
Regina Costa, (CA)
Thor Nelson (CO)
Julie Rones (DC)
Charlie Beck (FL)
Alice Hyde (IA)
Tim Seat (IN)
Theresa Czarski (MD)
Mike Travieso (MD)
Wayne Jortner (ME)
Garth Morrisette (MN)
Karen Long(NC)
James Anderson (NH)
Heikki Leesment (NJ)
Rich Wiener (NM)
Charles Van Dyke (NV)
B. Robert Piller (NY)
Douglas Elfner (NY)
Elliott Elam (SC)
Suzi Ray McClellan (TX)
Amy Schwab (VA)
Robert Manifold (WA)

National Association of State Utility Consumer Advocates
8380 Colesville Road, Suite 101, Silver Spring, MD  20910
Phone: (301) 589-6313 Fax: 589-6380
e-mail: nasuca@nasuca.org