[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: http://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: [email protected].
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: http://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: [email protected] 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