WASHINGTON -- MCI WorldCom Inc., AT&T Corp. and other U.S. phone companies lost their role in resolving consumer complaints about illegal changes in service as federal regulators gave the states new authority in such cases.
The Federal Communications Commission revised rules adopted two years ago to more clearly define actions to resolve slamming, which happens when a company switches a customer's long-distance service without authorization. The FCC had given companies the responsibility to verify complaints and determine any reimbursement. Those rules were challenged in court.MCI WorldCom, AT&T, Sprint Corp., Qwest Communications International Inc. and others opposed giving competitors the power to set compensation. Instead, they proposed having a third-party arbitrator resolve cases, a plan rejected by the FCC because the industry couldn't agree. The agency now must go to court before the revised rules take affect.
"I think with this order, and with our increased enforcement in this area, we will eradicate slamming in this country, and that will be a good thing," FCC Chairman William Kennard said.
The original rules had produced a "dramatic improvement" by reducing complaints, until MCI WorldCom challenged the agency's action in court, Kennard said. The rules were aimed at stripping away profit from illegally switching consumers. The FCC today bolstered those rules by adding a penalty for the company that makes a switch, in addition to forcing it to surrender any cash from the customer.
In April last year, a month before the rules were to take effect, the FCC received 1,355 slamming complaints, and the total fell to 840 a month later. By comparison, Bell Atlantic Corp. got 35,556 slamming complaints in March last year and 15,951 in May.
The decline came as long-distance carriers beefed up verification procedures to avoid inadvertently switching customers and losing money, the FCC said.
Under the rules adopted in 1998, a customer got 30 days of free long-distance service if his service was changed, removing any incentive for illegally switching consumers.
Still, the consumers' designated long-distance company lost money. To remedy that problem, the FCC's new rules require a company that switches a customer to pay the long-distance provider 150 percent of any money received from the customer.
The chosen company, AT&T for example, would pay the customer 50 percent of the money it received from the company that violated the rules. Such a step will make sure both customer and company are reimbursed for the illegal act, the agency said.