| For Immediate Release | CONTACT: | Holly Anderson, ext. 114 |
| February 18, 1998 | ||
| (202) 835-3323 | ||
PORTLAND, MAINE...FEBRUARY 18...Phone slamming continues to frustrate and anger consumers despite efforts by phone companies and lawmakers, said National Consumers League's Vice President for Public Policy, Susan Grant, at a Senate hearing held in Portland, Maine today.
"The present system is not adequate. It is too easy to abuse and must be changed," stated Grant, who reviewed every carrier switching complaint made in the last year to the NCL's National Fraud Information Center (NFIC). She testified before the Senate Permanent Subcommittee on Investigations about the rising tide of slamming, which ranked as the 5th most frequent subject made to the NFIC in 1997.
The League suggests several solutions to slamming. They are:
1. Ban "negative option" promotions for telecommunications services. Consumers fail to grasp the fact that if they ignore these solicitations, they are agreeing to purchase the services.
2. Change the verification process for switching. Written or taped authorization does not work because it can be faked. Furthermore, there is no requirement that proof of authorization be submitted along with the change order to the local exchange carrier. Rather, the authorization is only provided after the damage has been done, if the consumer questions the switch.
One idea that NCL suggested is that consumers be issued PIN numbers by their local exchange carriers when they first obtain service. Consumers' service could be switched only if they provided their PIN numbers to their desired new carriers, who would submit them for confirmation to the exchange carriers with the change orders. To avoid the potential problem of consumers' service being repeatedly switched once their PIN numbers become known, consumers could be given new PIN numbers by their local exchange carriers each time they changed any of their telephone service providers.
Alternatively, there could be a requirement that consumers be notified in writing by their local exchange carriers whenever change orders have been submitted. Consumers would have to respond affirmatively within a certain time period or the change would not be made.
2. Require that the address of the telephone service provider or its agent be provided on the bill. This would help consumers dispute charges and report slamming incidents.
3. Require telephone service providers and billing aggregators to meet specific minimum standards for handling consumer disputes regarding alleged slamming. If those standards are not met, local exchange companies should be barred from preforming billing services for those service providers or billing aggregators. Any monies payable to the slammers should be forfeited and used for consumer redress and public education. In addition, Congress should consider the possibility of greater penalties for slamming.
5. Give consumers the right to refuse payment to the slammers or their representatives. The most effective way to deter slamming is to prevent companies that change consumers' service without authorization from being able to reap the financial reward for doing so. While NCL supports the idea that payments consumers have made to unauthorized carriers be passed back to their original carriers, this would not remove entirely the economic incentive for carriers to slam, or that it would make consumers whole. Consumers will continue to pay, fearful of losing their telephone service. And like other fraudulent telemarketing operators, some slammers will undoubtedly hide their ill-gotten gains in off-shore bank accounts, change their company names, and continue in the same or some other illegal activity. Ultimately, recovery by the consumer or the original carrier may not be possible, or could be greatly delayed.
6. Improve the carrier freeze option. With the carrier, or "PIC" freeze, consumers have more protection against unauthorized carrier switching because their local exchange carriers cannot implement any change orders without the consumers' direct authorization. However, even this option is not foolproof at present. Some consumers' service providers are switched even when they have PIC freezes. One way that this apparently can happen is when the slammer is a reseller of service from the consumer's original carrier. For instance, if the consumer has AT&T long distance service and another company buys bulk service from AT&T to resell, that company may switch the consumer's long distance service to its own without authorization, but the local exchange carrier may not be aware of that because its system cannot tell that there is a new company involved, since the ultimate telephone service provider is still AT&T.
Grant noted that while considerable time and energy is being spent to develop new phone services for which consumers can be charged, research should also be done to develop new ways to protect consumers from slamming. "Consumers need to get back control over their telephone service," she said.
For more information about
slamming...
The National Consumers League, founded in 1899, is America's pioneer consumer organization. NCL's three-pronged approach of research, education and advocacy has made it an effective representative and source of information for consumers and workers. NCL is a private, nonprofit membership organization dedicated to representing consumers on issues of concern.