Protecting Consumers From Unauthorized Carrier Changes and Related Unauthorized Charges, 33140-33143 [2018-14151]
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33140
Federal Register / Vol. 83, No. 137 / Tuesday, July 17, 2018 / Rules and Regulations
Federal-State Joint Board on Universal
Service; Lifeline and Link-Up; Universal
Service Reform—Mobility Fund, WC
Docket Nos. 10–90, 07–135, 05–337, 03–
109; GN Docket No. 09–51; CC Docket
Nos. 01–92, 96–45; WT Docket No. 10–
208, Order and Further Notice of
Proposed Rulemaking, 26 FCC Rcd
17663 (2011) (USF/ICC Transformation
Order), and the Commission and
Wireline Competition Bureau have since
adopted a number of orders that
implement the USF/ICC Transformation
Order; see also Connect America Fund
et al., WC Docket No. 10–90 et al., Third
Order on Reconsideration, 27 FCC Rcd
5622 (2012); Connect America Fund et
al., WC Docket No. 10–90 et al., Order,
27 FCC Rcd 605 (Wireline Comp. Bur.
2012); Connect America Fund et al., WC
Docket No. 10–90 et al., Fifth Order on
Reconsideration, 27 FCC Rcd 14549
(2012); Connect America Fund et al.,
WC Docket No. 10–90 et al., Order, 28
FCC Rcd 2051 (Wireline Comp. Bur.
2013); Connect America Fund et al., WC
Docket No. 10–90 et al., Order, 28 FCC
Rcd 7227 (Wireline Comp. Bur. 2013);
Connect America Fund, WC Docket No.
10–90, Report and Order, 28 FCC Rcd
7766 (Wireline Comp. Bur. 2013);
Connect America Fund, WC Docket No.
10–90, Report and Order, 28 FCC Rcd
7211 (Wireline Comp. Bur. 2013);
Connect America Fund, WC Docket No.
10–90, Report and Order, 28 FCC Rcd
10488 (Wireline Comp. Bur. 2013);
Connect America Fund et al., WC
Docket No. 10–90 et al., Report and
Order, Order and Order on
Reconsideration and Further Notice of
Proposed Rulemaking, 31 FCC Rcd 3087
(2016). The Commission has received
OMB approval for most of the
information collections required by
these orders. At a later date, the
Commission plans to submit additional
revisions for OMB review to address
other reforms adopted in the orders
(e.g., 47 CFR 54.313(a)(6)).
More recently, on August 23, 2016,
the Commission adopted the Alaska
Plan Order. See Connect America Fund
et al., WC Docket Nos. 10–90, 16–271;
WT Docket No. 10–208, Report and
Order and Further Notice of Proposed
Rulemaking, 31 FCC Rcd 10139 (2016)
(Alaska Plan Order). In that order, the
Commission adopted a plan for
providing Alaskan rate-of-return carriers
and competitive eligible
telecommunications carriers (ETCs) the
option to obtain a fixed level of funding
for a defined term in exchange for
committing to deployment obligations
that are tailored to each Alaskan
carrier’s circumstances. ETCs receiving
support pursuant to the Alaska Plan
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must comply with the Commission’s
existing high-cost reporting and
oversight mechanisms, with certain
exceptions and modifications.
On July 7, 2017, the Commission
adopted the ETC Reporting Streamlining
Order. See Connect America Fund; ETC
Annual Reports and Certifications, WC
Docket Nos. 10–90, 14–58, Report and
Order, 32 FCC Rcd 5944 (2017) (ETC
Reporting Streamlining Order). In that
order, the Commission streamlined the
annual reporting requirements for ETCs
by eliminating rules duplicative of other
reporting requirements or that are no
longer necessary.
Further, since the previous filing
deadline associated with this collection,
changing circumstances have made
filing certain information no longer
necessary or required under the rules.
For instance, the final Connect America
Phase I incremental support deployment
deadlines were in early 2017, so there
are no longer any reporting obligations
associated with that support.
Moreover, because the Connect
America Phase II challenge process has
ended, the Commission removed Form
505 from this collection. The
Commission also moved FCC Form 507,
FCC Form 508, FCC Form 509 and the
accompanying instructions to
information collection 3060–0233.
The Commission therefore revises this
information collection, as well as Form
481 and its accompanying instructions,
to reflect these new or modified
requirements. The Commission also
implemented a number of nonsubstantive changes to the Form 481
and accompanying instructions. Any
increased burdens for particular
reporting requirements are associated
with ETCs newly subject to those
requirements as a condition of receiving
high-cost support.
SUMMARY:
Federal Communications Commission.
Marlene Dortch,
Secretary, Office of the Secretary.
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).
[FR Doc. 2018–15171 Filed 7–16–18; 8:45 am]
BILLING CODE 6712–01–P
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
Federal Communications
Commission.
ACTION: Final rule.
AGENCY:
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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 Richard.Smith@fcc.gov.
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 fcc504@fcc.gov 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).
Synopsis
Misrepresentations on Sales Calls
1. The Commission’s recent
enforcement actions reveal that
misrepresentations on sales calls are a
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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
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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
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33141
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-inbilling rules to help detect it, the
Commission has never codified a rule
against cramming. The Commission
thus codifies in a new § 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
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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 § 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
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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
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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
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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.
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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
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.
2. Amend § 64.1120 by revising
paragraphs (a)(1)(i) and (b) to read as
follows:
■
§ 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]
*
*
*
*
*
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33143
(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 fiveyear period from utilizing the thirdparty verification process to confirm a
carrier change.
*
*
*
*
*
■ 3. Amend § 64.2401 by adding
paragraph (g) to read as follows:
§ 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
FEDERAL COMMUNICATIONS
COMMISSION
47 CFR Part 64
[WC Docket No. 17–141; CC Docket No.
96–128; WC Docket No. 16–132; FCC 18–
21]
Modernization of Payphone
Compensation Rules; Implementation
of the Pay Telephone Reclassification
and Compensation Provisions of the
Telecommunications Act of 1996; 2016
Biennial Review of
Telecommunications Regulations
Federal Communications
Commission.
ACTION: Final rule; announcement of
effective date.
AGENCY:
In this document, the
Commission announces that the Office
of Management and Budget (OMB) has
approved, for a period of three years, the
information collection associated with
the Commission’s payphone
compensation rules. This document is
consistent with the Modernization of
Payphone Compensation Rules Report
and Order, FCC 18–21, which stated
that the Commission would publish a
document in the Federal Register
announcing the effective date of those
rules.
SUMMARY:
The amendment to 47 CFR
64.1310(a)(3) published at 83 FR 11422,
March 15, 2018, is effective on July 17,
2018.
FOR FURTHER INFORMATION CONTACT:
Michele Levy Berlove, Attorney
Advisor, Wireline Competition Bureau,
at (202) 418–1477, or by email at
Michele.Berlove@fcc.gov. For additional
DATES:
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]]>Agencies
[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]
-----------------------------------------------------------------------
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.
-----------------------------------------------------------------------
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
