[Federal Register Volume 83, Number 137 (Tuesday, July 17, 2018)]
[Rules and Regulations]
[Pages 33140-33143]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-14151]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 64

[CG Docket No. 17-169; FCC 18-78]


Protecting Consumers From Unauthorized Carrier Changes and 
Related Unauthorized Charges

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: In this document, the Commission takes measures to strengthen 
our rules to protect consumers from slamming and cramming by codifying 
rules against sales call misrepresentations and cramming and revising 
rules to improve the effectiveness of the third-party verification 
(TPV) process. Slamming is an unauthorized change in a consumers' 
telephone provider and cramming is the placement of an unauthorized 
charge on the consumers' telephone bill.

DATES: Effective August 16, 2018.

FOR FURTHER INFORMATION CONTACT: Richard D. Smith, Consumer and 
Governmental Affairs Bureau (717) 338-2797, email 
[email protected].

SUPPLEMENTARY INFORMATION:  This is a summary of the Commission's 
Report and Order, document FCC 18-78, adopted on June 7, 2018, and 
released on June 8, 2018, in CG Docket No. 17-169. The full text of 
document FCC 18-78 will be available for public inspection and copying 
via the Commission's Electronic Comment Filing System (ECFS), and 
during regular business hours at the FCC Reference Information Center, 
Portals II, 445 12th Street SW, Room CY-A257, Washington, DC 20554. To 
request materials in accessible formats for people with disabilities 
(Braille, large print, electronic files, audio format), send an email 
to [email protected] or call the Consumer and Governmental Affairs Bureau 
at (202) 418-0530 (voice), (844) 432-2272 (videophone), or (202) 418-
0432 (TTY).

Congressional Review Act

    The Commission will send a copy of document FCC 18-78 to Congress 
and the Government Accountability Office pursuant to the Congressional 
Review Act, see 5 U.S.C. 801(a)(1)(A).

Final Paperwork Reduction Act of 1995 Analysis

    The Report and Order does not contain any new or modified 
information collection requirements subject to the Paperwork Reduction 
Act of 1995, Public Law 104-13. In addition, therefore, it does not 
contain any new or modified information collection burden for small 
business concerns with fewer than 25 employees, pursuant to the Small 
Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 
U.S.C. 3506(c)(4).

Synopsis

Misrepresentations on Sales Calls

    1. The Commission's recent enforcement actions reveal that 
misrepresentations on sales calls are a

[[Page 33141]]

continuing source of slamming. The Commission therefore codifies a rule 
to prohibit material misrepresentation, including material omissions, 
in sales calls to further reduce the incidence of slamming. A codified 
rule is consistent with the Commission's statutory authority and prior 
enforcement actions. In addition, codifying this prohibition in our 
rules will provide carriers and consumers with more specific 
information and notice of this prohibited practice. In so doing, the 
Commission notes that it revised the Slamming and Cramming NPRM's 
proposed rule, published at 82 FR 37830, August 14, 2017, on sales 
calls by deleting the reference to ``deception.'' The Commission finds 
that this term is vague and subject to an unclear interpretation absent 
a record to define it.
    2. Upon a finding of material misrepresentation in the sales call, 
the consumer's authorization to change carriers will be deemed invalid 
even if the carrier has some evidence of consumer authorization of a 
switch. In this regard, our enforcement cases make clear that sales 
misrepresentations may not be cured by a facially valid TPV. When a 
consumer's decision to switch carriers is predicated on false 
information provided in a sales call, that consumer's authorization to 
switch carriers can no longer be considered binding.
    3. A codified rule is consistent with the Commission's statutory 
authority and prior enforcement actions. Section 201(b) of the Act 
states, in pertinent part, that ``[a]ll charges, practices, 
classifications, and regulations for and in connection with [interstate 
or foreign] communication service [by wire or radio], shall be just and 
reasonable, and any such charge, practice, classification, or 
regulation that is unjust or unreasonable is declared to be unlawful.'' 
The Commission has found that misrepresentations made by interstate 
common carriers constitute unjust and unreasonable practices under 
section 201(b) of the Act. Sales calls that contain misrepresentations 
undermine the effectiveness of the carrier's validation procedures 
under Section 258 of the Act, and thus are an unjust and unreasonable 
practice that is ``in connection with'' the communication service that 
is the subject of the verification process.
    4. Material Violations. The Commission bans only ``material'' 
misrepresentations on sales calls. In so doing, the Commission 
acknowledges that occasional minor or trivial inaccuracies that have no 
bearing on the consumer's decision to switch carriers can occur and may 
not rise to a level warranting enforcement action, consistent with how 
the Commission has exercised its enforcement discretion in the past. 
The Commission declines, however, to require that such 
misrepresentations also be ``intentional.'' The Commission has never 
articulated an intentionality standard when it has penalized carriers 
for misrepresentations on sales calls in the past. Rather, the 
Commission's forfeiture policies already require that, when determining 
the appropriate adjustment to a base forfeiture amount (rather than 
whether the act is a violation), the Commission considers ``egregious 
conduct'' and ``intentional violation'' consistent with section 503 of 
the Act. The Commission believes this allows sufficient flexibility to 
take ``intent'' into consideration as an aggravating or mitigating 
factor when a violation of this rule occurs.
    5. Defining ``Sales Call.'' The Commission's slamming rules are 
designed to prevent a provider from switching a consumer's preferred 
carrier without the consumer's permission. Section 258 of the Act makes 
it unlawful for any telecommunications carrier to ``submit or execute a 
change in a subscriber's selection of a provider of telephone exchange 
service or telephone toll service except in accordance with such 
verification procedures as the Commission shall prescribe.'' Thus, for 
purposes of the slamming rules, the Commission clarifies that a ``sales 
call'' is any telephone call in which a carrier encourages a subscriber 
to submit or execute a change in the subscriber's provider of telephone 
exchange service or telephone toll service.
    6. Recording Sales Calls. The Commission declines to mandate that 
sales calls be recorded. Although the Commission agrees with commenters 
that recordings would aid in determining whether a misrepresentation 
occurred, the record contains unrebutted evidence that any such mandate 
would necessitate industry-wide installation of recording technologies, 
amending existing protocols with vendors that make such calls on 
carriers' behalf, recording large numbers of calls, and storing those 
records for some specified period when the vast majority of these calls 
do not result in consumer complaints. The principal consumer benefit of 
a recording mandate would be to aid enforcement, but the Commission is 
confident in light of the success of our prior enforcement actions that 
we can continue to enforce our rules even without a mandate, and 
nothing in the record persuades us otherwise.
    7. Nonetheless, the Commission encourages carriers and their agents 
to record sales calls. The Commission clarifies that a consumer's 
allegation of a sales call misrepresentation shifts the burden of proof 
to the carrier making the sales call to provide persuasive evidence to 
rebut the claim. The Commission believes that in those instances in 
which a consumer has provided credible evidence of a misrepresentation 
that a carrier is uniquely positioned via its access to sales scripts, 
recordings, training, and other relevant materials relating to sales 
calls to proffer evidence to rebut those claims if they are without 
merit. In most instances, the consumer will not have access to these 
same materials. An accurate and complete sales call recording may be a 
carrier's best such evidence, and the record indicates that at least 
some carriers already record calls for training and monitoring 
purposes. Those carriers that do not and/or choose not to record sales 
calls will have to develop other means to rebut credible consumer 
allegations of misrepresentations on sales calls.

Unauthorized Charges on Telephone Bills

    8. The Commission codifies a prohibition on the placement of 
unauthorized charges on telephone bills. Although cramming has been a 
long-standing issue addressed in various enforcement actions, and the 
Commission has adopted truth-in-billing rules to help detect it, the 
Commission has never codified a rule against cramming. The Commission 
thus codifies in a new Sec.  64.2401(g) of the Commission's truth-in-
billing rules the prohibition against cramming that it has long 
enforced under section 201(b) of the Act. The Commission believes 
codifying the cramming prohibition for wireline and wireless carriers 
will act as a deterrent to this conduct. In so doing, the Commission 
agrees with commenters that codifying a ban against cramming provides 
greater clarity to interested parties and will aid its enforcement 
efforts. In addition, codifying this prohibition into its rules will 
provide consumers with more specific information and notice of this 
prohibited practice.
    9. The Commission agrees with those commenters who contend that 
wireless consumers should be afforded the same consumer protections as 
wireline consumers when such unauthorized charges appear on their 
telephone bills. This approach is also consistent with the Commission's 
prior enforcement

[[Page 33142]]

investigations conducted under section 201(b) holding wireless 
providers accountable for alleged unauthorized charges that appeared on 
wireless bills.

Third-Party Verification

    10. Authorizing Individual Services. The Commission eliminates the 
requirement in Sec.  64.1120(b) of its rules that carriers must obtain 
the authorization for each individual service sold when the carrier is 
selling more than one telecommunications service to a subscriber. The 
Commission agrees with those commenters who suggest there is minimal 
benefit to asking consumers if they want to separately switch 
individual services based on regulatory classifications that may be 
outdated and unfamiliar to them.
    11. TPV Abuses. The Commission remains concerned that the TPV 
process has been misused in some instances to fraudulently verify 
consumer authorization to switch providers. Its prior enforcement 
actions confirm instances of abuse of the TPV process. Although the 
current record does not contain a sufficient basis to eliminate this 
widely-used verification mechanism, the Commission believes that these 
documented abuses warrant additional oversight. As a result, the 
Commission concludes that any carrier that becomes the subject of a 
Commission forfeiture order through abuse of that process will be 
suspended for a period of five years from using the TPV process to 
confirm consumer switches. That will necessitate that these carriers 
use other recognized sources of evidence under our rules, such as a 
letter of agency, to confirm a consumer switch during the pendency of 
that suspension. The Commission notes that this suspension process will 
be applied only going forward from the effective date of the rules 
adopted in document FC 18-78. Thus, carriers and verifiers will be 
afforded an opportunity to take proactive measures to correct any 
deficiencies that have resulted in prior enforcement actions. In 
addition to strengthening its requirements in this action, the 
Commission reminds carriers that it takes violations of its rules 
seriously and the Commission will continue to use its enforcement 
authority to stop bad actors, including through substantial monetary 
penalties and revocation of Commission operating authorization.

Other Measures

    12. In light of the enhanced consumer protections afforded by the 
rules adopted in document FCC 18-78, the apparent diminishing nature of 
the slamming and cramming problem as evidenced by recent complaint 
data, and the potential costs of compliance with additional 
requirements, the Commission declines to mandate any other changes to 
its rules.

Final Regulatory Flexibility Analysis

    13. As required by the Regulatory Flexibility Act of 1980, as 
amended (RFA) an Initial Regulatory Flexibility Analysis (IRFA) was 
incorporated in the Slamming and Cramming NPRM. The Commission sought 
written public comment on the proposals in the Slamming and Cramming 
NPRM, including comments on the IFRA. This present Final Regulatory 
Flexibility Analysis (FRFA) conforms to the RFA.

Need For, and Objectives of, the Proposed Rules

    14. This document FCC 18-78 adopts rules to strengthen consumer 
protections from slamming and cramming. Slamming is the unauthorized 
change of a consumer's preferred interexchange telecommunications 
service provider, and cramming is the placement of unauthorized charges 
on a consumer's telephone bill. Despite existing slamming and truth-in-
billing rules, recent enforcement actions indicate that the most 
vulnerable consumers, including the elderly and non-English speakers, 
remain at significant risk of being the victims of these fraudulent 
practices because unscrupulous carriers often make it difficult to 
detect such conduct. Specifically, the Commission adopts rules designed 
to provide greater clarity of these existing prohibitions and assist in 
our enforcement actions where such conduct occurs.
    15. Section 258 of the Act makes it unlawful for any 
telecommunication carrier to ``submit or execute a change in accordance 
with such verification procedures as the Commission shall prescribe.'' 
The rules adopted in document FCC 18-78 will strengthen the 
Commission's ability to deter slamming by addressing misleading 
statements made in sales calls which the record confirms are a 
substantial factor in slamming. For example, when a consumer's decision 
to switch carriers is made based on false information provided in a 
sales call, that consumer's authorization to switch carrier will no 
longer be considered binding. In addition, the Commission streamlines 
the carrier change process by eliminating the requirement that the 
consumer's authorization be obtained for every service to be switched 
when selling more than one telecommunications service. This will 
improve the efficiency for both carriers and consumers when making 
carrier change requests by eliminating unnecessary regulatory 
impediments. Finally, any telecommunications carrier that is the 
subject of a Commission forfeiture action will be suspended for a 
period of five years from using that process to confirm a consumer 
switch. This will ensure that greater care is taken by both carriers 
and verifiers to avoid TPV abuses.
    16. The Commission has found on numerous instances that cramming is 
an ``unjust and unreasonable'' practice in violation of section 201(b) 
of the Act but has never codified a prohibition against cramming in our 
rules. Doing so in document FCC 18-78 provides greater clarity of this 
long-recognized prohibition to interested parties and will assist in 
our enforcement efforts of this prohibited practice.

Summary of Significant Issues Raised by Public Comments in Response to 
the IRFA

    17. One comment was filed that specifically addressed the proposed 
rules and policies presented in the IRFA. Although supporting the 
adoption of the two proposed rules contained in the Slamming and 
Cramming NPRM, NTCA argues that the IRFA was deficient because the 
other measures discussed therein were vague and lacked specificity.

Response to Comments by Chief Counsel for Advocacy of Small Business 
Administration

    18. Pursuant to the Small Business Jobs Act of 2010, which amended 
the RFA, the Commission is required to respond to any comments filed by 
the Chief Counsel for Advocacy of the Small Business Administration, 
and to provide a detailed statement of any change made to the proposed 
rules as a result of those comments.
    19. The Chief Counsel did not file any comments in response to the 
proposed rules in this proceeding.

Small Entities Impacted

    20. The rules adopted in document FCC 18-78 will affect obligations 
of Wireline and Wireless telecommunications carriers.

Description of Projected Reporting, Recordkeeping, and Other Compliance 
Requirements

    21. In document FCC 18-78, the Commission adopt rules to enhance 
the existing consumer protections from slamming and cramming. 
Specifically, the Commission adopts rules to codify a ban on: (i) 
Material misrepresentations

[[Page 33143]]

on sales calls for voice services; and (ii) unauthorized charges on 
telephone bills. Although the Commission has previously held that these 
practices are unjust and unreasonable practices under section 201(b) of 
the Act, its rules have not expressly prohibited them. Because these 
prohibitions have been long recognized pursuant to our enforcement 
actions, however, they should not necessitate any new burdens for those 
carriers are that in compliance. In addition, the Commission takes 
steps to improve the effectiveness of the existing carrier change 
process by eliminating the requirement that carriers obtain the 
authorization to switch each individual service when selling more than 
one service and by suspending any carrier for a five-year period from 
using the TPV process when it becomes the subject of a Commission 
forfeiture action.

Steps Taken To Minimize Significant Impact on Small Entities, and 
Significant Alternatives Considered

    22. The RFA requires an agency to describe any significant, 
specifically small business alternatives that it has considered in 
developing its approach, which may include the following four 
alternatives (among others): ``(1) the establishment of differing 
compliance or reporting requirements or timetables that take into 
account the resources available to small entities; (2) the 
clarification, consolidation, or simplification of compliance or 
reporting requirements under the rule for small entities; (3) the use 
of performance, rather than design, standards; and (4) an exemption 
from coverage of the rule, or any part thereof, for small entities.''
    23. The rules adopted in document FCC 18-78 codify long-recognized 
consumer protections from slamming and cramming. In prior enforcement 
actions, the Commission has previously held that these practices are 
unjust and unreasonable practices under section 201(b) of the Act. As a 
result, the economic impact on affected carriers should be minimal 
because they impose no new requirements. In declining to adopt other 
measures discussed in the Slamming and Cramming NPRM, the Commission 
has taken into consideration the potential burdens on carriers, 
including smaller carriers, in determining that such actions are not 
justified at this time. In these instances, the Commission has taken 
into consideration the concerns of industry commenters that the 
potential costs and delays that may result from these measures outweigh 
the potential benefits to consumers.

Ordering Clauses

    Pursuant to sections 1-4, 201(b), and 258 of the Communications Act 
of 1934, as amended, 47 U.S.C. 151-154, 201, 258, document FCC 18-78 is 
adopted, and part 64 of the Commission's rules, 47 CFR 64.1120 and 
64.2401 are amended.
    The Commission's Consumer and Governmental Affairs Bureau, 
Reference Information Center, shall send a copy of document FCC 18-78 
to Congress and the Government Accountability Office pursuant to the 
Congressional Review Act.
    The Commission's Consumer and Governmental Affairs Bureau, 
Reference Information Center, shall send a copy of document FCC 18-78, 
including the Final Regulatory Flexibility Analysis, to the Chief 
Counsel for Advocacy of the Small Business Administration.

List of Subjects in 47 CFR Part 64

    Communications common carriers, Telecommunications.

Federal Communications Commission.
Marlene Dortch,
Secretary, Office of the Secretary.

Final Rules

    For the reasons discussed in the preamble, the Federal 
Communications Commission amends 47 CFR part 64 as follows:

PART 64--MISCELLANEOUS RULES RELATING TO COMMON CARRIERS

0
1. The authority citation for part 64 is revised to read as follows:

    Authority: 47 U.S.C. 154, 201, 202, 218, 222, 225, 226, 227, 
228, 251(e), 254(k), 403(b)(2)(B), (c), 616, 620, 1401-1473, unless 
otherwise noted.


0
2. Amend Sec.  64.1120 by revising paragraphs (a)(1)(i) and (b) to read 
as follows:


Sec.  64.1120  Verification of orders for telecommunications services.

    (a) * * *
    (1) * * *
    (i) Authorization from the subscriber, subject to the following:
    (A) Material misrepresentation on the sales call is prohibited. 
Upon a consumer's credible allegation of a sales call 
misrepresentation, the burden of proof shifts to the carrier making the 
sales call to provide persuasive evidence to rebut the claim. Upon a 
finding that such a material misrepresentation has occurred on a sales 
call, the subscriber's authorization to switch carriers will be deemed 
invalid.
    (B) [Reserved]
* * * * *
    (b) Any telecommunications carrier that becomes the subject of a 
Commission forfeiture action through a violation of the third-party 
verification process set forth in paragraph (c)(3) of this section will 
be suspended for a five-year period from utilizing the third-party 
verification process to confirm a carrier change.
* * * * *

0
3. Amend Sec.  64.2401 by adding paragraph (g) to read as follows:


Sec.  64.2401  Truth-in-Billing Requirements.

* * * * *
    (g) Prohibition against unauthorized charges. Carriers shall not 
place or cause to be placed on any telephone bill charges that have not 
been authorized by the subscriber.

[FR Doc. 2018-14151 Filed 7-16-18; 8:45 am]
 BILLING CODE 6712-01-P