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News Analysis

Fortnightly Magazine - October 1 1998

school districts, law firms and dedicated fax lines have been targeted, as well.

Legislation: Too Heavy-Handed?

The subcommittee's earlier hearings on slamming paved the way for anti-slamming legislation that Collins and her subcommittee colleague, Sen. Dick Durbin (D-Ill.) introduced, and which the Senate passed in May. The two senators apparently have the same goal in mind with cramming.

"To stop cramming," Collins declared, we need a combination of tough enforcement by the regulators, industry self-discipline, and meaningful consumer protection." Durbin suggested that phone bills need to be redesigned to be more customer-friendly, and referred to the need to "be vigilant to protect" consumers in this "Wild West atmosphere." Another subcommittee member, Sen. Thad Cochran (R-Miss.), also is convinced that action is needed. "If there's not a law against it, there ought to be," he said.

The FCC, Strickling testified, would like Congress to "extend the jurisdiction of the FCC to reach the practices of the billing clearinghouses and service providers when unauthorized charges appear on consumers' telephone bills. At the same time, he says, Congress should clarify that the FTC has jurisdiction to ensure fair advertising and marketing practices, whether or not the entity responsible for cramming is a common carrier." Although this might result in some jurisdictional overlapping, Strickling said, that would be preferable to allowing "the bad actors to delay or avoid prosecution by taking advantage of potential gaps in jurisdiction."

Eileen Harrington of the FTC stressed that the commission is using what law-enforcement authority it already has to deal with cramming or other fraudulent companies, but she agreed that clarification of jurisdictional boundaries would be helpful.

There is some industry resistance to federal regulation in this area.

Roy Neel, president of the United States Telephone Association, told the subcommittee that while USTA welcomes "aggressive oversight" from Congress, local exchange carriers oppose specific federal regulations or legislation to deal with the problem. Such a move would only provide "a snapshot, or a freeze frame" of where the problem is today and today's solutions may not fit where the industry - or the problem - is in one or two years, he said. Instead, Neel prefers giving the industry time to implement the voluntary industry "best practices" guidelines, which were compiled at the behest of the FCC and unveiled the day prior to the subcommittee hearing (see box).

This "self-policing effort," Neel believes, "is a critical step toward purging telephone bills of this scourge." Although local exchange carriers are not accused of cramming, the local telephone industry still has an "intense interest in fixing this problem," Neel stressed. Any money an LEC may make from allowing a third-party service provider to add charges to its bill are "more than offset by the lack of trust and goodwill of its consumers," he added.

The Alternative: Screening by Telcos?

Some LECs didn't wait for industry-compiled guidelines to act against crammers.

Since January 1997, U S WEST Communications has reviewed every product - and the provider's marketing materials - before allowing a service to be added to its local phone bills to ensure that