Phone Company Settles Slamming Case

Qwest, the nation's fourth largest long-distance company, has agreed to pay the government $1.5 million to settle charges that it illegally switched customers' long-distance service without their permission, federal regulators said Friday.

The consent agreement with the Federal Communications Commission resolves an agency investigation into allegations that the company switched customers' preferred long-distance carrier without their permission, a practice known as "slamming."

The commission proposed $2 million in fines against the Denver-based company last year for allegedly slamming 30 customers. Twenty-two of the cases involved alleged forgery or falsified letters of authorization to switch service. The other complaints alleged that Qwest had switched subscribers' long-distance carriers without proper authorization, in some cases failing to verify that consent was given.

The complaints involve slamming allegations against both Qwest and LCI International Telecom Corp., acquired by Qwest two years ago.

Qwest stressed that the FCC proposed the fines without making a finding of wrongdoing and said the complaints were logged before the company instituted an aggressive anti-slamming campaign.

"This agreement with the FCC allows us to put this unfortunate situation behind us and [we] look forward to continuing to serve our customers nationwide," said Mark Pitchford, senior vice president of consumer markets.

"We have made it clear to the FCC that we have zero tolerance for slamming and are continually evaluating and enhancing our anti-slamming efforts."

Qwest entered into negotiations with the FCC after the agency proposed the fine. The company agreed to make a voluntary payment of $1.5 million to the U.S. Treasury and to implement several measures to deter slamming.

The measures include increased third-party verification for change requests including safeguards to ensure that the consumer making the change is authorized to do so. Sales agents who submit improper orders will have to return at least 150 percent of the revenues they received from any slammed account.

Any sales agents found to have forged a signature will be terminated immediately, the company said.

Since implementing its anti-slamming policy in 1999, Qwest has terminated more than 25 sales agents and/or telemarketing agencies that filed false orders, the company said.

Separately, on Friday the FCC adopted rules that allow consumers to change their long-distance carrier on the Internet. That's in line with a new law passed this year which set a national framework for giving online signatures legal status.

Under previous commission rules, carriers needed authorization either by a signed written form or orally if verified by an independent third party. But the FCC said Internet changes must comply with existing agency rules meant to protect consumers.

The agency also implemented sevral measures to bolster its slamming rules, including requiring carriers to submit biannual reports on the complaints they receive.

The FCC adopted a comprehensive set of rules to combat the practice known as slamming two years ago, but they were stayed in federal appeals court. Last month, that stay was lifted, clearing the way for the agency to fully enforce those measures.

By Kalpana Srinivasan