RCMP: Theft of Telecommunications

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"The FAQ du Jour"

December 2, 1997     

You may've heard some news story recently about nefarious phone companies "hijacking" consumers' long-distance business without proper consent. This is commonly called "phone slamming."

In essence, phone slamming consists of an unauthorized change to a consumer's home or business telephone service. Legally, a company may only change your local toll or long-distance provider with a signed Letter of Agency (LOA) from you. Scam artists are finding sneaky ways around the Federal regulations.

According to some published accounts:

• The common slammer business model involves buying large blocks of long-distance time from major providers at a discounted rate, then reselling to consumers for profit.
• Methods of illicitly gathering an LOA include:
  - Misleading contest entry forms
  - Cash checks with LOA hidden in the fine print
  - Confusing or deceptive telemarketing calls
  - Forged LOA using data gathered without consent
  - Confused service orders (changing 3 lines instead of 1)
• When forced to produce the LOA documentation, some "slammer" companies provided documentation that had been forged.
• Incidence of phone slamming seems to parallel increases in consumers' household income, level of education and average phone bill. BUT in separate reports from Chicago and California, there's evidence that some slammers target Asian, African-American and Latino communities.
• During 1995, the Federal Communications Commission (FCC) received 11,278 complaints of slamming; in 1996, the number rose to over 16,000. In April, 1996, a record high of 24,000 complaints were registered with the California Public Utilities Commission. (Source: Sacramento Bee.)
• In a recent filing with the FCC, Pacific Bell claimed that slammers generated more than 245,000 complaints in California during 1996, and had cost the company more than $8 million.
• In late 1996, an administrative law judge ruled that a long-distance company based in La Jolla, CA, must pay $1.9 million for switching customers without their consent. Customers had claimed they never consented to the change, and were deterred from returning to their original provider. (Source: San Diego Daily Transcript.)
• In June, 1997, Texas Attorney General Dan Morales obtained an Assurance of Voluntary Compliance (AVC) from a New Jersey long distance provider which was allegedly slamming Texas consumers with misleading telemarketing techniques. (Source: Texas OAG.)
• In September, 1997, Missouri Attorney General Jay Nixon obtained a temporary restraining order against a vendor at a local festival who used a giveaway contest to improperly switch the long-distance service of contest registrants. Violating Federal regulations, the vendor did not make the LOA a separate document from the contest form; they also did not verbally describe the switch to victims. "Nixon also said [they] were operating an illegal lottery because contest participants were required to give something of value [the LOA] in order to take part in a game of chance." (Source: Missouri OAG.)

I had my own experience with phone slamming a few years ago. On three separate occasions, AT&T offered me a cash reward for changing my "Dial 1" long-distance carrier to them. No big deal; I access US Sprint directly by dialing "10333" anyway. Endorsing and cashing the check was considered legal authority for AT&T to make the change for me. I took the money, and AT&T became my "dial 1" provider. ... But they ALSO CANCELLED MY ACCOUNT with US Sprint. I read the checks carefully on the last two occasions, and found no authority to close or cancel my current provider's account. I argued with AT&T and Sprint until I was out of breath; both insisted that the authority to change my "Dial 1" carrier was also sufficient authority to cancel my Sprint account. Phooie, I said,... it's slamming. I still think so.

I consider this a "Hoax du Jour" because one of the ways that this "new threat" is being publicized is through e-mail. Both the e-mail discussion, and the major news stories, about phone slamming feature the three common features of Internet virus hoaxes (according to the CIAC):

The Hook

"This is happening right here in our community," or "It happened to me, don't let it happen to you...!"

The Threat

They can do this to your phone service, and you won't even know about it!

The Request

1. Call 1-700-555-4141 (toll-free) from your phone; a recorded voice will tell you the major carrier that handles your "Dial 1" service (though this is not entirely reliable).
2. Check your bill carefully for any unfamiliar charges.
3. Tell your local phone company to "freeze" your long distance carrier choice right away. You might do this with a PIC (Pre-subscribed Interexchange Carrier) restriction form.
4. And ... most of all, TELL ALL YOUR FRIENDS!

I've recently seen local TV stations present the threat of slamming wth all the alarm and hysteria that was previously displayed in the Michelangelo Computer Virus fiasco. (The link is to Rob Rosenberger's excellent account of the affair on his Computer Virus Myths site.) Once again, I think otherwise responsible reporters are playing the part of Chicken Little.

What I find rather insulting is the anxious urgency to the last item, The Request. Media consumer advocates are shrieking to viewers that they need to act protect themselves RIGHT NOW,... but conveniently forget to mention that this problem has been around for almost two years, and that the FCC enforces several consumer protection regulations. You are protected by law from paying higher rates or "change charges" if you are slammed. If you're slammed ... you have a recourse. (Source: FCC Consumer Alert.)

Many otherwise authoritative and informative announcements from consumer advocates, District Attorneys and Attorneys General refer to the problem as "sweeping our community" ... when in fact, many instances reflect attacks on areas by slammers IN ANOTHER STATE entirely. Again, it's the local angle that gets the urban folkloric juices flowing, in a manner similar to the "Bloods' Initiation Hoax" a few years ago.

Hence my assertion that this is something of a Hoax du Jour. Not because it isn't a real threat (and the consumer DOES have a recourse), but because the urgency of the problem is being blown out of proportion. By all means, make a review of your phone bill and talk to your local teleco, but PLEASE don't worry that the sky is falling.

David Spalding