Protecting Consumers From Unauthorized Carrier Changes and Related Unauthorized Charges, 37830-37838 [2017-16961]

Agencies

• FEDERAL COMMUNICATIONS COMMISSION

[Federal Register Volume 82, Number 155 (Monday, August 14, 2017)]
[Proposed Rules]
[Pages 37830-37838]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-16961]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 64

[CG Docket No. 17-169; FCC 17-91]


Protecting Consumers From Unauthorized Carrier Changes and 
Related Unauthorized Charges

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: In this document, the Commission proposes to amend its rules 
to prohibit carriers from misrepresenting themselves when placing 
telemarketing sales calls to consumers and placing unauthorized charges 
on their phone bills. The Commission seeks comment on ways to 
strengthen its rules to protect consumers from slamming and cramming 
and proposes to codify a rule prohibiting misrepresentations on carrier 
telemarketing calls to consumers that often precede a carrier switch, 
and proposes to codify a rule against cramming. The intended effect of 
this action is to prevent unscrupulous carriers from targeting 
vulnerable populations from committing fraud either on sales calls or 
when ``verifying'' a consumer switch.

DATES: Comments are due on or before September 13, 2017, and reply 
comments are due on or before October 13, 2017.

ADDRESSES: You may submit comments identified by CG Docket No. 17-169 
and/or FCC Number 17-91, by any of the following methods:
     Electronic Filers: Comments may be filed electronically 
using the Internet by accessing the Commission's Electronic Comment 
Filing System (ECFS), through the Commission's Web site: https://apps.fcc.gov/ecfs/. Filers should follow the instructions provided on 
the Web site for submitting comments. For ECFS filers, in completing 
the transmittal screen, filers should include their full name, U.S. 
Postal service mailing address, and CG Docket No. 17-169.
     Mail: Parties who choose to file by paper must file an 
original and one copy of each filing. Filings can be sent by hand or 
messenger delivery, by commercial overnight courier, or by first-class 
or overnight U.S. Postal Service mail (although the Commission 
continues to experience delays in receiving U.S. Postal Service mail). 
All filings must be addressed to the Commission's Secretary, Office of 
the Secretary, Federal Communications Commission.
    For detailed instructions for submitting comments and additional 
information on the rulemaking process, see the SUPPLEMENTARY 
INFORMATION section of this document.

FOR FURTHER INFORMATION CONTACT: Kimberly A. Wild, Consumer Policy 
Division, Consumer and Governmental Affairs Bureau (CGB), at (202) 418-
1324, email: Kimberly.Wild@fcc.gov.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Rules 
and Policies Protecting Consumers from Unauthorized Carrier Changes and 
Related Unauthorized Charges, Notice of Proposed Rulemaking, document 
FCC 17-91, adopted on July 13, 2017, released on July 14, 2017. The 
full text of document FCC 17-91 will be available for public inspection 
and copying via ECFS, and during regular business hours at the FCC 
Reference Information Center, Portals II, 445 12th Street SW., Room CY-
A257, Washington, DC 20554. A copy of document FCC 17-91 and any 
subsequently filed documents in this matter may also be found by 
searching ECFS at: https://apps.fcc.gov/ecfs/ (insert CG Docket No. 17-
169 into the Proceeding block).
    Pursuant to 47 CFR 1.415, 1.419, interested parties may file 
comments and reply comments on or before the dates indicated on the 
first page of this document. Comments may be filed using ECFS. See 
Electronic Filing of Documents in Rulemaking Proceedings, 63 FR 24121 
(1998).
     All hand-delivered or messenger-delivered paper filings 
for the Commission's Secretary must be delivered to FCC Headquarters at 
445 12th Street SW., Room TW-A325, Washington, DC 20554. All hand 
deliveries must be held together with rubber bands or fasteners. Any 
envelopes must be disposed of before entering the building.
     Commercial Mail sent by overnight mail (other than U.S. 
Postal Service Express Mail and Priority Mail) must be sent to 9300 
East Hampton Drive, Capitol Heights, MD 20743.
     U.S. Postal Service first-class, Express, and Priority 
mail should be addressed to 445 12th Street SW., Washington, DC 20554.
    Pursuant to Sec.  1.1200 of the Commission's rules, 47 CFR 1.1200, 
this matter shall be treated as a ``permit-but-disclose'' proceeding in 
accordance with the Commission's ex parte rules. Persons making oral ex 
parte presentations are reminded that memoranda summarizing the 
presentations must contain summaries of the substances of the 
presentations

[[Page 37831]]

and not merely a listing of the subjects discussed. More than a one or 
two sentence description of the views and arguments presented is 
generally required. See 47 CFR 1.1206(b). Other rules pertaining to 
oral and written ex parte presentations in permit-but-disclose 
proceedings are set forth in Sec.  1.1206(b) of the Commission's rules, 
47 CFR 1.1206(b).
    To request materials in accessible formats for people with 
disabilities (Braille, large print, electronic files, audio format), 
send an email to: fcc504@fcc.gov or call CGB at: (202) 418-0530 
(voice), or (202) 418-0432 (TTY). Document FCC 17-91 can also be 
downloaded in Word or Portable Document Format (PDF) at: https://www.fcc.gov/document/fcc-proposes-rules-aid-investigation-threatening-calls.

Initial Paperwork Reduction Act of 1995 Analysis

    Document FCC 17-91 seeks comment on proposed rule amendments that 
may result in modified information collection requirements. If the 
Commission adopts any modified information collection requirements, the 
Commission will publish another notice in the Federal Register inviting 
the public to comment on the requirements, as required by the Paperwork 
Reduction Act (PRA). Public Law 104-13; 44 U.S.C. 3501-3520. In 
addition, pursuant to the Small Business Paperwork Relief Act of 2002, 
the Commission seeks comment on how it might further reduce the 
information collection burden for small business concerns with fewer 
than 25 employees. Public Law 107-198, 116 Stat. 729; 44 U.S.C. 
3506(c)(4).

Synopsis

    1. All too often, unscrupulous carriers target Americans, including 
those within vulnerable populations like the elderly, recent 
immigrants, small businesses, and non-English speakers, to carry out 
unauthorized carrier changes, or ``slams.'' These carriers misrepresent 
who they are and why they are calling, fraudulently verify carrier 
changes, and add unauthorized charges, or ``crams,'' onto consumers' 
bills. Some sales agents pretend they are calling from a consumer's 
existing carrier, others pretend to call about a package delivery to 
record a consumer saying certain key phrases like their name and 
``yes.'' Still others bill for services never rendered or refuse to 
stop billing for new services even after a consumer terminates service.
    2. With document FCC 17-91, the Commission seeks comment on 
additional steps to protect consumers from slamming and cramming. The 
Commission seeks to strengthen its ability to take action against 
slammers and crammers, and deter carriers from slamming and cramming in 
the first place, without impeding competition or impairing the ability 
of consumers to switch providers.

Background

Slamming Rules

    3. Section 258 of the Communications Act of 1934, as amended 
(Communications Act or 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.'' To further protect 
consumers from slamming and provide them with control over their 
service providers, the Commission's rules allow consumers to opt in to 
freeze their choice of carriers. At the same time, the rules do not 
allow for the executing carrier to verify that the subscriber wants to 
change carriers, so as to avoid undue delay in authorized switches. 
Finally, the Commission adopted rules for calculating slamming carrier 
liability.

Continuing Problem

    4. Notwithstanding the Commission's rulemaking and enforcement 
actions to date, slamming and cramming continue to be a problem. 
Slammers, or would-be slammers, have also crammed consumers as part of 
their fraud schemes. The Commission is cognizant that it must balance 
the benefits of the proposals in document FCC 17-91 against the burden 
they may place on legitimate carrier changes and third-party charges. 
The steps the Commission seeks comment on today to strengthen its rules 
seek to address the evolving practices of bad actors with respect to 
slamming and cramming, while not impeding competition or impairing the 
ability of consumers to switch providers.

Notice of Proposed Rulemaking

    5. In document FCC 17-91, the Commission seeks comment on ways to 
strengthen its rules to protect consumers from slamming and cramming. 
The Commission believes its legal authority stems directly from 
sections 201(b) and 258 of the Act. The Commission has based slamming 
and cramming rules on these provisions of the Act in the past. The 
Commission notes that section 258 of the Act is clear that carriers 
cannot execute switches unless they do so ``in accordance with such 
verification procedures as the Commission shall prescribe.'' The 
Commission believes the anti-slamming steps it proposes here are 
``verification procedures'' consistent with the authority specified in 
section 258 of the Act. Similarly, the Commission has found that both 
sections 201(b) and 258 of the Act support its truth-in-billing rules, 
including those to prevent cramming on consumers' bills. The Commission 
seeks comment on the nature and scope of its authority to adopt the 
rules it proposes in document FCC 17-91.

Banning Misrepresentation and Unauthorized Charges

    6. The Commission's recent enforcement actions reveal that a major 
source of slamming is deception in the sales calls. The Commission 
seeks comment on proposed new rules to address sales call abuses and 
further reduce slamming. The Commission's current rules contain 
detailed verification procedures, adopted under section 258 of the Act, 
that specify that carriers shall not submit or execute carrier changes 
without authorization from the subscriber and verification of that 
authorization. The Commission has previously held that 
misrepresentations on sales calls are an unjust and unreasonable 
practice and unlawful under section 201(b) of the Act. Although the 
Commission has in place verification rules to prevent slamming, its 
rules do not expressly ban carrier- or carrier-agent-misrepresentations 
on the sales calls that typically precede a slam. The Commission thus 
proposes to codify, pursuant to sections 258 and 201(b) of the Act, a 
new Sec.  64.1120(a)(1)(i)(A) of its rules banning misrepresentations 
on the sales calls and stating that any misrepresentation or deception 
would invalidate any subsequent verification of a carrier change, even 
where the submitting carrier purports to have evidence of consumer 
authorization (e.g., a TPV recording). The Commission believes 
codifying such a ban would provide even greater clarity to carriers and 
will aid its enforcement efforts. The Commission seeks comment on this 
proposal. Are there any potential downsides to a codified rule against 
sales call misrepresentation? The Commission notes that its slamming 
rules currently do not apply to CMRS, pre-paid wireless, or 
interconnected Voice over Internet Protocol (VoIP). Are such 
misrepresentations enough of a problem for CMRS, pre-paid wireless and 
interconnected VoIP and sufficient to justify extending its proposed 
rule to cover those services? Would such a rule

[[Page 37832]]

impose any burden on legitimate marketing? How should the proposed rule 
interact with existing State slamming rules?
    7. The Commission also proposes to codify a rule against cramming. 
While cramming has been a long-standing problem 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 proposes to 
codify in a new Sec.  64.2401(g) of its rules the existing prohibition 
against cramming that the Commission has enforced under section 201(b) 
of the Act. The Commission believes codifying the cramming prohibition 
for wireline and wireless carriers would act as a deterrent. The 
Commission believes codifying a ban against cramming would provide even 
greater clarity to carriers and will aid its enforcement. The 
Commission seeks comment on this proposal. Are there any potential 
downsides to such a rule? The Commission's cramming rules currently do 
not apply to interconnected VoIP, and only some of the cramming rules 
apply to CMRS. Should the Commission extend this proposed rule to CMRS, 
pre-paid wireless and interconnected VoIP? Are there limitations on the 
Commission's ability to adopt the proposed cramming rule? Should this 
proposed rule be codified under the slamming rules as opposed to the 
cramming rules? The truth-in-billing rules do not define ``cramming'' 
or ``telephone bill.'' The Commission seeks comment on whether it 
should adopt such definitions for clarity of its rules. Many consumers 
today receive electronic bills and have constant online access to their 
telephone account showing in near real-time all fees, charges and 
assessments. If the Commission defines ``telephone bill'' in its rules, 
should it include the various ways that consumers can keep track of 
their telephone account activity?

PIC Freezes and Third-Party Billing

Preferred Carrier Freezes by Default

    8. The Commission's current rules allow consumers to protect 
themselves from slamming by ``freezing'' their choice of wireline 
providers if their local exchange carrier offers that ability. But to 
do so, a consumer must affirmatively opt in. Given the trend of 
consumers preferring to buy local and long-distance services together 
rather than separately, as well as emerging abusive practices in the 
market for resold local and long-distance services, the Commission 
seeks comment on making freezes the default so that consumers are 
automatically afforded additional protection against slamming, rather 
than requiring them to take extra steps to do so. The Commission 
believes this would give consumers more control to prevent slamming. 
Today, carriers must offer freezes for local, intraLATA and interLATA 
services and get separate authorization from consumers for each of the 
services the consumer chooses to freeze. A majority of consumers today 
purchase bundles of services rather than selecting individual services, 
and the Commission believes most consumers have no reason to 
distinguish interLATA and intraLATA services. The Commission seeks 
comment on eliminating the service distinctions for these purposes and 
having carrier freezes apply to all telephone services a consumer has 
with no need to seek separate authorization. The Commission believes 
consumers purchase CMRS and interconnected VoIP as all distance 
services and thus a default freeze does not make sense for these 
services. The Commission seeks comment on that view and whether it 
should consider extending default freezes to those services.
    9. If the Commission were to adopt a default freeze rule, should it 
apply to all local exchange carriers, or only those that currently 
offer freezes? What effect would the Commission's proposal have on 
carrier billing systems and sales practices? How should consumers be 
notified about this change to ensure they are fully aware of the 
default freeze? Should the Commission change its current requirements 
for notifying consumers about freezes, or relax those requirements? 
What procedures should be put in place to lift a default freeze? The 
Commission seeks comment on whether its freeze proposal would affect 
number exhaustion by incenting carriers to issue new numbers to 
consumers while waiting for the freeze to be lifted. The Commission's 
goals are to ensure that the default freeze is a strong safeguard 
against slamming while not unduly burdening consumers who may want to 
opt out of a freeze or giving executing carriers who may be losing the 
customer an opportunity to behave anti-competitively. The Commission 
seeks comment on how to achieve these goals along with whether carriers 
should be able to charge for freezes.
    10. What are the costs and benefits of a default freeze? For 
carriers that already offer consumers a freeze option, the cost to 
implement a default freeze should be relatively low, essentially 
changing a field in a preexisting database. For carriers that do not 
currently offer a preferred carrier freeze to their consumers, the 
implementation costs would presumably be greater. The benefits of a 
default freeze may be substantial, because would-be slammers would face 
significant obstacles to carrying out their intended slams. The 
Commission seeks comment on these views and ask commenters to provide 
details on costs and benefits of both implementing a default freeze and 
procedures to lift a default freeze. Can the Commission mitigate the 
costs by, for example, extending implementation deadlines and 
considering additional specific relief for smaller carriers? Could 
costs be further mitigated by applying a default freeze only to new 
customers and not existing ones? Should the Commission distinguish 
between smaller local exchange carriers and larger local exchange 
carriers in what rules should apply? What would be the cost savings for 
consumers and carriers in avoiding the expense and inconvenience of 
restoring service with their original carrier after a slam and seeking 
a refund for the unauthorized charges?

Blocking Certain Third-Party Billing by Default

    11. Today, the Commission's rules do not prohibit carriers from 
placing third-party charges on consumers' bills without verification by 
the consumer, a practice that has led to cramming. Consumers who do not 
have a preferred long-distance provider have been crammed when a third-
party carrier adds its long-distance service to the consumer's bill 
without authorization. Some consumers discover a slam and have their 
preferred carrier's service reinstated but are still billed by the 
slamming carrier for local or long-distance service.
    12. The Commission seeks comment on requiring wireline carriers to 
block third-party charges for local and long-distance service--a 
frequent source of slamming-related cramming--by default, and only bill 
such charges if a consumer opts in. Do consumers generally expect to be 
charged for local or long-distance service by third parties? What 
trends, if any, could inform the Commission's understanding of how 
consumers make choices in the market for telephone service? How 
prevalent are such third-party charges? Do the natural reductions in 
third-party billing as a result of market changes reduce the need for 
the type of rule the Commission proposes? The Commission notes that the 
vast majority of complaints and enforcement actions appear to target 
the billing practices of traditional local exchange carriers, not 
wireless carriers or interconnected VoIP providers. Is that because 
wireless

[[Page 37833]]

carriers and interconnected VoIP providers generally offer local and 
long-distance services as a bundle or for some other reason? 
Notwithstanding the lack of complaints and enforcement actions about 
CMRS and interconnected VoIP, the Commission seeks comment on whether 
it should extend its proposal to those services.
    13. How exactly should an opt-in process for third-party local and 
long-distance service work? For example, if a carrier offered its 
subscribers access to information about their account online, could a 
simple control be added so that consumers could opt in (or later opt 
back out) of third-party local and long-distance service billing? What 
opt-in options should be available for consumers that do not have 
Internet access? What information, if any, should be presented to 
consumers before they opt in to such third-party charges? Should opting 
in last indefinitely, or sunset after some period of time? Or could 
consumers opt in for only a single service change? How should consumers 
be made aware of the opt-in option? Should the Commission require 
providers to notify consumers at the point of sale? Should such notice 
appear on the provider's Web site and advertising materials or on 
consumers' bills? The Commission notes that several carriers have 
committed to blocking certain non-telecommunications third-party 
charges in the past. The Commission seeks specific comments on the 
processes they used to inform consumers about these changes.
    14. The Commission also seeks comment on several corner cases. For 
local exchange carriers that do not offer long-distance service, should 
opt in be required before any third-party long-distance service is 
charged to the consumer or only any change in third-party long-distance 
service? For consumers that currently subscribe to a third-party local 
or long-distance service, should those services be grandfathered? Or 
should those consumers be considered to have opted in already? And how 
should the Commission structure any rule to minimize the impact on 
single-use services--such as placing an international call through a 
third-party carrier or receiving a collect call--or other legitimate 
third-party local or long-distance services that haven't been subject 
to the same pattern of abuse that the Commission has seen in recent 
slamming and cramming cases?
    15. The Commission seeks comment on the costs and benefits of an 
opt-in process for third-party local and long-distance charges. The 
Commission believes that blocking such charges would be beneficial to 
consumers and reduce slamming and cramming significantly. Yet the 
Commission recognizes that changes to carrier billing systems can be 
costly. The Commission believes many carriers already have the ability 
to block third-party charges, and seeks comment on whether this is 
correct, and whether there would be any challenges, including billing 
system and notification changes, for carriers arising from adopting an 
opt-in mechanism for third-party charges. What are the costs of 
implementing an opt-in mechanism for third-party charges? For those 
carriers that do not currently offer the option to block third-party 
charges, what costs would be associated with making that protection 
available to consumers and how could the Commission craft rules to 
minimize those costs and burdens? Would the costs to carriers be 
mitigated if the timeframe to implement the opt-in mechanism was 
extended or if the opt-in mechanism was phased in, for example, by 
requiring an opt-in for new customers only? Do small carriers have 
unique implementation costs or other burdens, and if so, how should the 
Commission address those issues?

Double-Checking a Switch With the Consumer

    16. Rather than requiring an opt in before placing third-party 
local or long-distance charges on a bill, should the Commission require 
the executing carrier to confirm or ``double-check'' whether the 
consumer wants to switch providers before making the change? Requiring 
the executing carrier to double-check a change request could be a 
strong anti-slamming safeguard because it gives the consumer a second 
opportunity to confirm a switch. If the Commission were to adopt such a 
requirement, the Commission seeks comment on how the Commission could 
best implement it.
    17. Would requiring that the executing carrier obtain the 
consumer's consent in writing or through the email address of record 
sufficiently protect consumers? Would mandating that the executing 
carrier obtain oral consent via a phone call to the consumer at the 
telephone number of record provide consumers with more protection from 
slamming? If the Commission requires the executing provider to confirm 
a switch request, what should the executing carrier be required to ask 
(e.g., ``the submitting carrier says that you would like to switch to 
them. Is that correct?'')? Are there First Amendment implications 
related to prescribing the language to be used by the executing 
carrier? Should the executing carrier have to follow, for all switch 
requests, the procedures that are presently only in place when a 
consumer has activated a preferred carrier freeze? Should the double-
check by the executing carrier be strictly limited to certain narrow 
questions with no opportunity for retention marketing? Should there be 
a deadline by which the double-check must occur? Should the executing 
carrier be required to notify the new carrier of the timing and outcome 
of the double-check? If so, should there be a timeframe within which 
that notice must occur? Finally, what should the consequences be if an 
executing carrier fails to meet the deadline? The Commission seeks 
comment on the effect the proposal would have on carrier billing 
systems and sales practices. Finally, the Commission seeks comment on 
whether its proposed double-check would have any effect on number 
exhaustion by incenting carriers to issue new numbers to consumers 
while waiting for verification and execution of the carrier change.
    18. Currently, unless a consumer has activated a preferred carrier 
freeze, the slamming rules do not allow the executing carrier to verify 
whether the subscriber wants to change carriers when it receives a 
preferred carrier change request because of previous Commission 
concerns that that approach would be expensive, unnecessary, and 
duplicative of the submitting carrier's verification. At the time those 
rules were adopted, the local and long-distance markets had only been 
recently opened to competition, and there was concern that an executing 
carrier might intentionally delay the carrier change or attempt to 
retain the subscriber. Today, the market for wireline communications 
services is more established and competitive, and consumers have access 
to a wide variety of providers and technologies to obtain long-distance 
services and are more likely to purchase bundles of services from the 
same provider. In addition, slamming has evolved, and the rules the 
Commission adopted almost two decades ago have not proven effective in 
preventing slamming. Do market trends involving stand-alone long-
distance service impact the need for the type of slamming rules the 
Commission proposes? Based on the marketplace today, the Commission 
also seeks comment on the relationship between the ease of switching 
voice providers and broadband adoption. The Commission seeks to avoid 
unintended negative consequences of its proposals. For example, would 
they effectively

[[Page 37834]]

``lock'' consumers into bundles of services that may not meet their 
current broadband needs? Finally, and fundamentally, the Commission 
seeks comment on the prevalence of incidences of slamming as seen in 
its enforcement actions versus the number of legitimate carrier changes 
that occur.
    19. Given these changes in the marketplace and the continued and 
evolving problem of slamming faced by consumers, the Commission seeks 
comment on whether the Commission's previous concerns about delays and 
anti-competitive practices that could arise from a double-check 
requirement are still valid. If the previous concerns are still well-
founded, are those concerns now outweighed by other factors, such as 
ensuring that consumers are not victimized by the new forms of 
slamming? The Commission seeks comment on whether and how the changed 
circumstances since 1998 have reduced the danger of anti-competitive 
behavior, as well as how to structure a double-check mechanism to avoid 
or limit any competitive harms. Similar to its proposals above, the 
Commission seeks comment on whether it should extend its proposal to 
CMRS and interconnected VoIP providers. In the past, the Commission 
expressed concern that requiring verification by the executing carrier 
could be a de facto preferred carrier freeze without the consumer's 
consent that would take control away from consumers. The Commission 
seeks comment on whether the Commission should adopt both a 
verification by the executing carrier and the default carrier freeze 
proposed above. Are these processes duplicative and if so, does it make 
sense to provide consumers with two levels of protection against 
slamming? Does one option benefit consumers in ways that the other does 
not? The Commission seeks comment on the costs to consumers, if any, of 
both options.
    20. The Commission also seeks comment on the costs and benefits of 
requiring some form of secondary verification by the executing carrier 
before switching a consumer's long-distance provider. The Commission 
believes the costs of requiring the executing carrier to perform a 
simple double-check by phone, email or in writing would be fairly 
modest, yet the consumer benefit in stopping slamming would be 
substantial. The Commission seeks comment on these views and ask 
commenters to provide details on costs and benefits. The Commission 
also seeks comment on how it can further mitigate the costs by, for 
example, extending implementation deadlines of any rules adopted and 
considering additional specific relief for smaller carriers.
    21. Section 222(b) of the Act. When it previously determined that 
executing carriers should not verify carrier changes, the Commission 
expressed concern that such verification would violate section 222(b) 
of the Act. Section 222(b) of the Act states that a carrier that 
``receives or obtains proprietary information from another carrier for 
purposes of providing any telecommunications service shall use such 
information only for such purpose, and shall not use such information 
for its own marketing efforts.'' The Commission found that the 
information contained in a submitting carrier's change request is 
proprietary because the submitting carrier must provide information 
regarding the consumer's choice of long-distance providers to the 
executing carrier, to which the executing carrier would otherwise not 
have access, to obtain provisioning of service for the new subscriber. 
Thus, under the Commission's current rules the executing carrier can 
only use the information to provide service to the submitting carrier, 
i.e., changing the subscriber's carrier, and may not attempt to verify 
that subscriber's decision to change carriers.
    22. The Commission notes that section 222(d)(2) of the Act provides 
an exception allowing the carrier to use the customer information ``to 
protect users of those services and other carriers from fraudulent, 
abusive, or unlawful use of, or subscription to such services.'' The 
Commission tentatively concludes that this exception supports its 
proposals to allow the executing carrier to use the customer 
information to re-verify that the consumer wants to change providers. 
The Commission seeks comment on this interpretation. The Commission 
also seeks comment on whether a carrier indeed is using the 
``proprietary information'' received from a submitting carrier only for 
``purposes of providing any telecommunications service'' if it uses 
that information to verify a carrier switch without conducting any 
additional marketing. The Commission seeks comment on whether double-
checking by the executing provider could be permissive, rather than 
required, and whether permissive double-checking would fulfill the 
Commission's policy goals of deterring slamming.
    23. If the Commission determines that section 222 of the Act 
supports requiring executing carriers to confirm a switching request, 
it is important to note that the exceptions in section 222(d) of the 
Act that allow the carrier to use the consumer information for a 
specific purpose would not allow the re-verification process to be used 
for retention marketing, and any rule the Commission adopts would bar 
the executing carrier from using the confirmation process for marketing 
or anticompetitive purposes. The Commission seeks comment on this view, 
and on how its rules could best implement such a bar.

Other Measures

Recording Sales Calls

    24. The Commission's current verification rules provide that 
carriers shall not submit or execute carrier changes without 
authorization from the subscriber and verification of that 
authorization. The Commission seeks comment on whether submitting 
carriers that rely on TPVs should be required to record the entire 
sales call that precedes a switch. The Commission seeks comment on how 
to define a sales call. The Commission believes that a requirement to 
record all sales calls would deter misrepresentation and aid 
enforcement if misrepresentation does occur. The Commission seeks 
comment on this view.
    25. If the Commission requires that sales calls be recorded, should 
the Commission require the same two-year retention of the recordings as 
it currently does for TPV calls? Should the Commission also require 
that sales representatives give the consumer specific information to 
help them understand the call's purpose, for example: (1) The identity 
of the company that is calling or on whose behalf the call is being 
made; (2) that the sales representative is not affiliated with the 
consumer's current long-distance, international, or other toll carrier 
(if true); and (3) the purpose of the call is to inquire whether the 
consumer is authorized to make a change to and wishes to change his or 
her long-distance, international, or other toll service from his or her 
current preferred carrier to the calling carrier. Should the 
Commission's rules also prohibit the sales representative from (1) 
making any false or misleading statements to the consumer regarding the 
third-party verifier or the role of the verifier, and (2) instructing 
the consumer in how he or she should respond to the verifier's 
questions? In the alternative, the Commission seeks comment on whether 
recording the sales call should be voluntary as opposed to being 
required and whether a valid recording should serve as an affirmative 
defense if a slamming complaint was filed against the carrier. Further, 
are there First

[[Page 37835]]

Amendment implications related to prescribing specific notifications?
    26. The Commission does not believe that requiring the disclosures 
discussed above, as well as recording and preserving the sales call, 
would be costly for providers. At the same time, based on evidence from 
recent consumer complaints and enforcement actions indicating that 
sales call misrepresentations are a significant source of slamming, the 
Commission believes the benefits to consumers are material. The 
Commission seeks comment on these views and asks commenters to provide 
details on costs and benefits of its proposals. The Commission also 
seeks comment on how it can further mitigate the costs by, for example, 
extending implementation deadlines and considering additional specific 
relief for smaller carriers.

Third-Party Verifications

    27. The Commission seeks comment on whether TPVs are an effective 
means of providing evidence that a consumer wishes to switch carriers. 
Would eliminating TPVs as a verification mechanism be effective in 
preventing slamming and provide substantial benefits to consumers? How 
would the elimination of TPVs affect legitimate providers' sales 
efforts? If the TPV is eliminated, are there other mechanisms the 
Commission should put in place to verify authorization of a carrier 
change? Should consumers have the option to sign up for service online 
after the sales call has ended, or to call a designated customer 
service number to confirm their desire to switch long distance or other 
toll services? The Commission seeks comment on the impact of these or 
other verification mechanisms on competition. The Commission seeks 
comment on the costs and benefits of elimination of the TPV option. The 
Commission also seeks comment on how it can further mitigate any costs 
to providers by, for example, extending implementation deadlines and 
considering additional specific relief for smaller carriers.
    28. If the Commission decides to retain TPVs as evidence of a 
consumer's wish to switch providers, how might it make them more 
difficult to falsify? The Commission's rules require that TPVs elicit 
certain information, including the subscriber's identity, that the 
person on the call is authorized and wishes to make the switch, and the 
telephone numbers to be switched. Should the Commission update the TPV 
requirements to require that consumers affirmatively state all 
telephone numbers to be switched, rather than, as is currently 
permitted, to allow the third-party verifier to read off the numbers to 
be switched? Because the third-party verifier must already obtain 
specific information during the TPV, the Commission does not believe 
adding this requirement represents a significant additional cost. But 
the Commission believes it would benefit consumers by making it more 
difficult to falsify TPVs.
    29. Are there other ways to ensure the validity of the TPV? For 
example, should the Commission require certification of third-party 
verifiers by either carriers or the Commission? Does the Commission 
have authority to require such certification? The Commission also seeks 
comment on whether there are any current provisions in its verification 
requirements that it could update to make the rules clearer and easier 
to follow. Should the Commission eliminate the requirement that 
verifiers must get confirmation of each individual service sold (e.g., 
intraLATA and interLATA service)? Does this requirement make sense in 
today's bundle-oriented marketplace? The Commission asks commenters to 
provide details on costs and benefits of implementing these potential 
rule changes. The Commission also seeks comment on how it can further 
mitigate the costs by, for example, extending implementation deadlines 
and considering additional specific relief for smaller carriers.

Initial Regulatory Flexibility Act Analysis

    30. As required by the Regulatory Flexibility Act of 1980, as 
amended, (RFA), the Commission has prepared the Initial Regulatory 
Flexibility Analysis (IRFA) of the possible significant economic impact 
on a substantial number of small entities by the policies and rules 
proposed in document FCC 17-91. Written public comments are requested 
on the IRFA. Comments must be identified as responses to the IRFA and 
must be filed by the deadlines for comments on document FCC 17-91 
provided on the first page of document FCC 17-91. The Commission will 
send a copy of document FCC 17-91, including the IRFA, to the Chief 
Counsel for Advocacy of the Small Business Administration (SBA).

Need for, and Objectives of, the Proposed Rules

    30. Document FCC 17-91 contains proposals regarding how to 
strengthen the Commission's rules to prevent 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 detailed slamming rules and truth-in-billing rules, thousands 
of consumers are still being slammed and billed for unauthorized 
charges. Since, 2010, the Commission's Enforcement Bureau has brought 
multiple actions against carriers for slamming and cramming violations. 
These actions have resulted in over $80 million dollars in fines and 
proposed forfeitures. The Commission believes that adopting the 
proposals in document FCC 17-91 will provide consumers with the 
additional safeguards they need to protect themselves from this risk.
    31. Specifically, document FCC 17-91 seeks comment on whether and, 
if so, how: (1) The Commission should codify in a rule the prohibition 
against deceptive marketing and misrepresentations on the sales call; 
(2) the Commission should codify in a rule the prohibition against 
placing unauthorized charges on a consumer's telephone bill; (3) the 
Commission should make preferred carrier freezes the default rather 
than something the consumer must initiate; (4) the Commission should 
require consumers to opt in to third-party billing; (5) the Commission 
should require executing carriers to make contact with consumers to 
verify preferred carrier change requests prior to execution; (6) the 
Commission should require recording and retention of the sales call; 
and (7) the Commission should modify the verification rules relating to 
preferred carrier changes to require the consumer to affirmatively list 
the telephone numbers to be switched in a TPV, or update the TPV 
requirements to eliminate the requirement to list all services being 
changed, or eliminate the TPV altogether as an option to verify 
authorization of a carrier switch.

Legal Basis

    32. The legal basis for any action that may be taken pursuant to 
document FCC 17-91 is contained in sections 1-4, 201(b), and 258 of the 
Communications Act of 1934, as amended, 47 U.S.C. 151-154, 201(b), 258.

Description and Estimate of the Number of Small Entities to Which the 
Proposed Rules Will Apply

    33. The RFA directs agencies to provide a description of, and where 
feasible, an estimate of the number of small entities that will be 
affected by the proposed rules, if adopted. The RFA generally defines 
the term ``small entity'' as having the same meaning as the terms 
``small business,'' ``small

[[Page 37836]]

organization,'' and ``small governmental jurisdiction.'' In addition, 
the term ``small business'' has the same meaning as the term ``small 
business concern'' under the Small Business Act. Under the Small 
Business Act, a ``small business concern'' is one that: (1) Is 
independently owned and operated; (2) is not dominant in its field of 
operation; and (3) meets any additional criteria established by the 
Small Business Administration.

Wireline Carriers

    34. Incumbent Local Exchange Carriers (Incumbent LECs). Neither the 
Commission nor the SBA has developed a small business size standard 
specifically for incumbent local exchange services. The closest 
applicable size standard under SBA rules is for the category Wired 
Telecommunications Carriers. The U.S. Census Bureau defines this 
industry as ``establishments primarily engaged in operating and/or 
providing access to transmission facilities and infrastructure that 
they own and/or lease for the transmission of voice, data, text, sound, 
and video using wired communications networks. Transmission facilities 
may be based on a single technology or a combination of technologies. 
Establishments in this industry use the wired telecommunications 
network facilities that they operate to provide a variety of services, 
such as wired telephony services, including VoIP services, wired 
(cable) audio and video programming distribution, and wired broadband 
internet services. By exception, establishments providing satellite 
television distribution services using facilities and infrastructure 
that they operate are included in this industry.'' Under that size 
standard, such a business is small if it has 1,500 or fewer employees. 
Census data for 2012 show that there were 3,117 firms that operated 
that year. Of this total, 3,083 operated with fewer than 1,000 
employees. Consequently, the Commission estimates that most providers 
of incumbent local exchange service are small businesses.
    35. Competitive Local Exchange Carriers (Competitive LECs), 
Competitive Access Providers (CAPs), Shared-Tenant Service Providers, 
and Other Local Service Providers. Neither the Commission nor the SBA 
has developed a small business size standard specifically for these 
service providers. The appropriate size standard under SBA rules is for 
the category Wired Telecommunications Carriers. The U.S. Census Bureau 
defines this industry as ``establishments primarily engaged in 
operating and/or providing access to transmission facilities and 
infrastructure that they own and/or lease for the transmission of 
voice, data, text, sound, and video using wired communications 
networks. Transmission facilities may be based on a single technology 
or a combination of technologies. Establishments in this industry use 
the wired telecommunications network facilities that they operate to 
provide a variety of services, such as wired telephony services, 
including VoIP services, wired (cable) audio and video programming 
distribution, and wired broadband internet services. By exception, 
establishments providing satellite television distribution services 
using facilities and infrastructure that they operate are included in 
this industry.'' Under that size standard, such a business is small if 
it has 1,500 or fewer employees. Census data for 2012 show that there 
were 3,117 firms that operated that year. Of this total, 3,083 operated 
with fewer than 1,000 employees. Consequently, the Commission estimates 
that most providers of competitive local exchange service, competitive 
access providers, Shared-Tenant Service Providers, and other local 
service providers are small entities.
    36. The Commission has included small incumbent LECs in this 
present RFA analysis. As noted above, a ``small business'' under the 
RFA is one that, inter alia, meets the pertinent small business size 
standard (e.g., a telephone communications business having 1,500 or 
fewer employees), and ``is not dominant in its field of operation.'' 
The SBA's Office of Advocacy contends that, for RFA purposes, small 
incumbent LECs are not dominant in their field of operation because any 
such dominance is not ``national'' in scope. The Commission has 
therefore included small incumbent LECs in this RFA analysis, although 
it emphasizes that the RFA action has no effect on Commission analyses 
and determinations in other, non-RFA contexts.
    37. Interexchange Carriers (IXCs). Neither the Commission nor the 
SBA has developed a small business size standard specifically for 
providers of interexchange services. The appropriate size standard 
under SBA rules is for the category Wired Telecommunications Carriers. 
The U.S. Census Bureau defines this industry as ``establishments 
primarily engaged in operating and/or providing access to transmission 
facilities and infrastructure that they own and/or lease for the 
transmission of voice, data, text, sound, and video using wired 
communications networks. Transmission facilities may be based on a 
single technology or a combination of technologies. Establishments in 
this industry use the wired telecommunications network facilities that 
they operate to provide a variety of services, such as wired telephony 
services, including VoIP services, wired (cable) audio and video 
programming distribution, and wired broadband internet services. By 
exception, establishments providing satellite television distribution 
services using facilities and infrastructure that they operate are 
included in this industry.'' Under that size standard, such a business 
is small if it has 1,500 or fewer employees. Census data for 2012 show 
that there were 3,117 firms that operated that year. Of this total, 
3,083 operated with fewer than 1,000 employees. Consequently, the 
Commission estimates that the majority of IXCs are small entities.
    38. Other Toll Carriers. Neither the Commission nor the SBA has 
developed a size standard for small businesses specifically applicable 
to Other Toll Carriers. This category includes toll carriers that do 
not fall within the categories of interexchange carriers, operator 
service providers, pre-paid calling card providers, satellite service 
carriers, or toll resellers. The closest applicable size standard under 
SBA rules is for Wired Telecommunications Carriers. The U.S. Census 
Bureau defines this industry as ``establishments primarily engaged in 
operating and/or providing access to transmission facilities and 
infrastructure that they own and/or lease for the transmission of 
voice, data, text, sound, and video using wired communications 
networks. Transmission facilities may be based on a single technology 
or a combination of technologies. Establishments in this industry use 
the wired telecommunications network facilities that they operate to 
provide a variety of services, such as wired telephony services, 
including VoIP services, wired (cable) audio and video programming 
distribution, and wired broadband internet services. By exception, 
establishments providing satellite television distribution services 
using facilities and infrastructure that they operate are included in 
this industry.'' Under that size standard, such a business is small if 
it has 1,500 or fewer employees. Census data for 2012 show that there 
were 3,117 firms that operated that year. Of this total, 3,083 operated 
with fewer than 1,000 employees. Thus, under this category and the 
associated small business size standard, the majority of Other Toll 
Carriers can be considered small.

[[Page 37837]]

Wireless Carriers

    39. Wireless Telecommunications Carriers (except Satellite). Since 
2007, the Census Bureau has placed wireless firms within this new, 
broad, economic census category. Under the present and prior 
categories, the SBA has deemed a wireless business to be small if it 
has 1,500 or fewer employees. For the category of Wireless 
Telecommunications Carriers (except Satellite), Census data for 2012 
show that there were 967 firms that operated for the entire year. Of 
this total, 955 firms had fewer than 1,000 employees. Thus under this 
category and the associated size standard, the Commission estimates 
that the majority of wireless telecommunications carriers (except 
satellite) are small entities. Similarly, according to internally 
developed Commission data, 413 carriers reported that they were engaged 
in the provision of wireless telephony, including cellular service, 
Personal Communications Service PCS, and Specialized Mobile Radio SMR 
services. Of this total, an estimated 261 have 1,500 or fewer 
employees. Thus, using available data, the Commission estimates that 
the majority of wireless firms can be considered small.

Resellers

    40. Local Resellers. The SBA has developed a small business size 
standard for the category of Telecommunications Resellers. Under that 
size standard, such a business is small if it has 1,500 or fewer 
employees. Census data for 2012 show that 1,341 firms provided resale 
services during that year. Of that number, all operated with fewer than 
1,000 employees. Thus, under this category and the associated small 
business size standard, the majority of these pre-paid calling card 
providers can be considered small entities.
    41. Toll Resellers. The SBA has developed a small business size 
standard for the category of Telecommunications Resellers. Under that 
size standard, such a business is small if it has 1,500 or fewer 
employees. Census data for 2012 show that 1,341 firms provided resale 
services during that year. Of that number, all operated with fewer than 
1,000 employees. Thus, under this category and the associated small 
business size standard, the majority of these pre-paid calling card 
providers can be considered small entities.

Description of Projected Reporting, Recordkeeping, and Other Compliance 
Requirements for Small Entities

    42. Document FCC 17-91 contains proposals regarding how to 
strengthen the Commission's rules to prevent slamming and cramming. 
Until the proposed rules are defined in full, it is not possible to 
predict with certainty whether the costs of compliance will be 
proportionate between small and large providers. The Commission seeks 
to minimize the burden associated with reporting, recordkeeping, and 
other compliance requirements for the proposed rules.
    43. The proposals under consideration could result in additional 
costs to regulated entities. These proposals may necessitate that some 
carriers create new processes or make changes to their existing 
processes which would impose some additional costs to carriers. 
Document FCC 17-91 proposes to require: Reverification by the executing 
carrier; a default carrier freeze and procedures to lift the freeze; 
recording of sales calls and retention of such recordings for two 
years; certain information be conveyed during the sales call; 
implementation of new marketing methods; and an explicit opt-in 
decision for third-party billing. These proposals may require changes 
to certain carrier processes. However, some carriers may already be in 
compliance with some of these requirements and therefore, no additional 
compliance efforts will be required.

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

    44. The RFA requires an agency to describe any significant 
alternatives that it has considered in reaching its proposed 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.
    45. The Commission proposes rules to eliminate slamming and 
cramming on consumers' bills. The Commission believes that any economic 
burden these proposed rules may have on carriers is outweighed by the 
considerable benefits to consumers. Consumers are currently being 
charged for services they never authorized and in some instances never 
received. In addition, consumers must expend significant time and 
energy trying to recoup these costs and get back to the provider of 
their choice. In document FCC 17-91 the Commission specifically asks 
how to minimize the economic impact of its proposals on small entities. 
For instance, the Commission seeks comment on the specific costs of the 
measures it discusses in document FCC 17-91, and ways it might mitigate 
any implementation costs, including by extending implementation 
deadlines for small carriers. It also particularly asks whether smaller 
carriers face unique implementation costs and, if so, how the 
Commission might address those concerns. In addition, for example, it 
seeks comment on alternatives for how a carrier should obtain a 
consumer's decision to opt in to third-party charges, if the Commission 
decides to adopt an ``opt-in'' approach. Finally, the Commission seeks 
comment on the overall economic impact these proposed rules may have on 
carriers because the Commission seeks to minimize all costs associated 
with these proposed rules.
    46. The Commission expects to consider the economic impact on small 
entities, as identified in comments filed in response to document FCC 
17-91 and the IRFA, in reaching its final conclusions and taking action 
in this proceeding.

Federal Rules That May Duplicate, Overlap, or Conflict With the 
Proposed Rules

    47. None.

List of Subjects in 47 CFR Part 64

    Claims, Communications common carriers, Computer technology, 
Credit, Foreign relations, Individuals with disabilities, Political 
candidates, Radio, Reporting and recordkeeping requirements, 
Telecommunications, Telegraph, Telephone.


Federal Communications Commission.
Katura Jackson,
Federal Register Liaison Officer, Office of the Secretary.

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

PART 64--MISCELLANEOUS RULES RELATING TO COMMON CARRIERS

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

    Authority:  47 U.S.C. 154, 225, 254(k), 403(b)(2)(B), (c), 715, 
Pub. L. 104-104, 110

[[Page 37838]]

Stat. 56. Interpret or apply 47 U.S.C. 201, 218, 222, 225, 226, 227, 
228, 254(k), 616, 620, and the Middle Class Tax Relief and Job 
Creation Act of 2012, Pub. L. 112-96, unless otherwise noted.

0
2. Amend Sec.  64.1120 by revising paragraph (a)(1)(i) 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) Misrepresentation and/or deception on the sales call is 
prohibited. Authorization is not valid if there is any 
misrepresentation and/or deception when making the sales call.
    (B) [Reserved]
* * * * *
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. For purposes of this subsection, 
telephone bill means any bill that contains charges for an interstate 
telecommunications service.

[FR Doc. 2017-16961 Filed 8-11-17; 8:45 am]
 BILLING CODE 6712-01-P