On August 13, 2019, the FCC’s Enforcement Bureau announced that it settled a nearly three-year long investigation into whether CenturyLink included unauthorized charges from third-party service providers on customer bills. Also known as “cramming,” the assessment of unauthorized charges is a major source of consumer complaints and frequent focus of FCC enforcement actions. The CenturyLink Consent Decree follows in the wake of a handful of enforcement actions for cramming when accompanied by unlawful carrier switches (“slamming”) and the FCC’s adoption of new rules codifying its longstanding ban on cramming in 2018. The settlement underscores the responsibility borne by carriers for the chargers they place on customer bills – even for services they do not provide – and the need to maintain safeguards to ensure such charges are authorized.

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At its July 2017 Open Meeting, the Federal Communications Commission (“FCC”) adopted a Notice of Proposed Rulemaking (“NPRM”) designed to strengthen and expand consumer protections against “slamming” and “cramming.” Slamming is the unauthorized change of a consumer’s preferred service provider, while cramming is the placement of unauthorized charges on a consumer’s telephone bill.  As we reported in our Open Meeting preview, slamming and cramming represent a major source of consumer frustration and a common focus of recent FCC enforcement actions. The NPRM is the agency’s first attempt in five years to strengthen the rules around slamming and cramming – and is the first attempt to specifically define cramming in its rules.  Moreover, the agency asks whether these rules should apply to wireless carriers (especially prepaid wireless) and to VoIP providers, potentially expanding the reach of the rules significantly.  Wireless carriers and interconnected VoIP providers should therefore pay close attention to the potential compliance obligations and marketing restrictions proposed in the NPRM.

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It’s no secret that one of the majostock_12192012_0878r stories in the last two years has been the increased activism of the Federal Communications Commission’s (“FCC”) Enforcement Bureau (“Bureau”).  February 2016 was no exception in terms of the nature and level of activity.  In this blog entry, we highlight a few orders that stand out

For the second consecutive year, the FCC has increased the fines it proposes for slamming and related violations.  On January 24, 2014, the FCC proposed to fine U.S. Telecom Long Distance, Inc. (USTLD) over $5 million for deceptive marketing and billing practices.  The USTLD Notice of Apparent Liability alleges that the company engaged in (1) misleading marketing practices, (2) slamming (unlawful switching of presubscribed carriers without authorization), (3) cramming (unlawful billing of services without authorization) and (4) Truth-in-Billing rule violations.  Although the NAL addresses practices that are not new, the NAL is noteworthy in its use of increased fines (called “upward adjustments” in FCC enforcement practice).  As discussed below, the FCC proposes substantial upward adjustments for “extensive violations” and for violations that cause “substantial harm” to consumers and the elderly.  These upward adjustments for slamming violations appear to be part of a trend to increase the overall size of FCC enforcement actions in recent years.
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 In a move that appears aimed to maximize options for new Chairman Tom Wheeler when he assumes office, the FCC turned its attention again to its rules to address unauthorized charges on telephone bills, known colloquially as "cramming."  The FCC is asking parties to refresh the record in its docket considering rules for landline and mobile carriers to address cramming.  Parties are asked to address recent filings by state commissions seeking additional rules, particularly with respect to the extent to which cramming is a problem on wireless bills.  

The FCC has an inconsistent history in addressing cramming — it still does not have any required verification rules for placing charges on telephone bills, for example.  Yet the FCC has taken occasional enforcement actions, proposing significant fines or settling cases for significant amounts.  This public notice provides an opportunity for the FCC to clarify, for carriers and third-party providers alike, the extent of a service provider’s duties with respect to charges billed on telephone invoices.


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Yesterday, the FCC proposed another $5 million fine for insufficient disclosures on prepaid calling cards.  This action is best understood as an echo to the FCC’s action in September, when it proposed four similar $5 million fines against other prepaid calling card providers.  In fact, I believe that this NAL has been circulating at the FCC since shortly before the other four NALs were released.

2011 has been highlighted by an active FCC using Section 201(b) of the Act to engage in consumer-focused enforcement.  Although the FCC’s authority to use 201(b) in this way is in doubt, the lesson for carriers is clear, especially in the prepaid market.  Carriers should clearly and conspicuously disclose all material terms and conditions of their services.  Failure to do so risks claims of deceptive marketing or cramming. 


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