Telecommunications Cost Management

Telephone Toll Fraud, Scams and Slamming

Prepared by William Dubovsky

Situation: Protecting Your Home or Business from Fraud

Consumers have a great deal more control over their telephone services today than ever before. New technologies provide consumers more information and more flexibility in how they use these services.

However, this shift in control has led to an increase in toll fraud by making both consumers and telephone companies more susceptible to toll fraud. This material has been prepared to answer questions and to provide helpful information and advice on how consumers can avoid and combat toll fraud, scams and slamming.

Consumers have reported to the FCC that they have received calls from people claiming to be FCC inspectors or long distance telephone company representatives investigating calls placed to other states or countries from the consumers' telephone numbers.

In some cases, the caller has given a fake FCC badge or inspector number. These calls are made to trick consumers into accepting the charges for telephone calls that the consumer has neither placed nor approved. This is also a way for unapproved people to get calling card numbers.

Usually, an unknown caller will tell the consumer that records show that calls have been charged to the consumer's line and that the FCC or the telephone company is calling to check if there is something wrong with the telephone line or equipment. The consumer is then told that a supervisor will call, usually within a certain time period, and that the consumer should only say YES when asked to accept charges for that call. Be Aware: If the consumer says YES to accept the second call, the consumer is approving the use of his or her number to be billed for a collect or third party call that someone else placed to another state or to another country!

FCC personnel will never ask a consumer to accept charges for any call. Nor will telephone company personnel ask a consumer to accept charges for a call placed by a company supervisor or to only say YES when asked to accept additional telephone calls. Consumers should keep in mind that testing or other checks carried out by a telephone company would not involve acceptance of collect or third-number billed calls. Also, neither the FCC nor telephone company personnel would ask for a consumer's name, address, and telephone number, or the identity of any friends or relatives you may have living in another country. Any of these types of questions, or any questions asking for personal information, such as credit card numbers or telephone company calling card numbers, should warn you that the call may be a toll fraud attempt.

Most people know that 900 numbers are pay-per-call numbers. Did you know that 500 and 700 numbers are also pay-per-call? If you call a number with a 500 or 700 code in the US you're going to get billed for it like any 900 number. Even scarier - 809, 268, 664 are international long distance calls to the Caribbean. Companies are using these numbers as pay-per-calls to get around regulations and 900 block. These companies get rebates from their foreign phone companies for these calls. In this way they get paid, but they don't have to obey US 900# regulations. These regulations require them to warn you of the charge and rate involved, and also to provide a time period during which you may terminate the call without charge.

Many people are reporting getting messages on their answering machines or pagers telling them that it is urgent they call a telephone number beginning with 809, 268 or 664. They then call the number only to hear a long or offensive recorded message (and they later find a ridiculous sum of money charged to their phone bill. Another recent ruse, employment ads for jobs such as "mystery shoppers" list a local number, which has a recording referring callers to an 809 area code number. A recording on that number contains a long message that refers to companies that supposedly offer jobs for shoppers who check on store quality. When people call those companies, which are legitimate businesses, there are no jobs to be had. The companies don't even know they are mentioned on the recording.

If you get a message on your machine and you don't know the person, don't call if it's not in your area code. If you feel you must call, at least check with the phone company for the applicable rates before you call. Just because you don't know it's a pay-per-call number doesn't mean that you won't get charged for it. Remember, if the call is that important, they'll call back.

If you think that a call is a toll fraud attempt, you should do the following:

1) Tell the caller you are going to check with the telephone company to see if there is a problem;

2) Immediately hang up and call your local telephone company business and security offices;

3) Never accept third-number billing or collect calls from unknown callers;

4) Talk with your local telephone company about having your line blocked from third-number and collect call billings; and

5) Contact local or law enforcement officials.

Use the following suggestions to help keep from becoming a victim:

1) Memorize your calling card number and Personal Identification Number (PIN).

2) Choose a number that is easy to remember. Do not put your PIN number on your calling card.

3) Use a telephone that reads your calling card number from the magnetic strip on the back of the card.

4) If this type of telephone is unavailable, take steps to prevent others from watching you dial your card number or overhearing you give your number to an operator.

5) Remember that your chances of becoming a victim of toll fraud are greater during the vacation and year-end holiday seasons.

6) Take extra care to guard your calling card, credit card and PIN numbers.

7) Immediately report a lost or stolen credit card to the local or long distance company that issued it. The company will cancel your card and issue you a new one.

8) Avoid using your telephone calling card as identification for consumer purchases or cashing checks. Others may see or hear the number.

You can be responsible for as much as $50 in unapproved calling card charges under the Truth in Lending Act and Federal Reserve Board regulations. As soon as you realize that something suspicious has happened:

1) Contact your local telephone company and the long distance company identified on your bill as the carrier of the fraudulent calls to discuss the charges;

2) Contact local or federal law enforcement officials;

3) Cancel your calling card if a person has your calling card or calling card number without your approval

The FCC and Toll Fraud Complaints

The FCC does handle complaints that concern billing disputes, which are based on acts of interstate or international toll fraud. You should first call your local telephone company, if the billing page was included with your local telephone bill, or the long distance company identified on the billing page. Also, you should call the long distance company about any charges that are billed directly to you by it. If you are unsuccessful in your attempts to settle the complaint, send a typed or hand-printed letter in your own words to:

1) Your name, address and telephone number where you can be reached during the business day;

2) The name, address and telephone number of the person or persons who you believe placed the calls;

3) The name of your local and long distance telephone companies;

4) The names and telephone numbers of the telephone company employees who you talked with to try to settle your complaint; and any other information that you believe would be helpful in processing your complaint.

Consumers can contact the following for assistance, if they are victims of telephone toll fraud:

Federal Bureau of Investigation Consumer Protection Branch

7799 Leesburg Pike Common Carrier Bureau

South Tower, Suite 200 Federal Communications Commission

Falls Church, VA 22043 Mail Stop 1600A2

Washington, D.C. 20554

State Agencies or Offices

State Consumer Protection Offices

Local Telephone Company

Long Distance Telephone Company

Local Law Enforcement Office

Slamming is a term used to describe any practice that changes a consumer's long distance carrier without the customer's knowledge or consent. The Federal Communications Commission's policies and rules prohibit slamming and the Commission enforces these policies and rules through investigation of individual complaints and patterns of slamming practices.

Customers have the right to use any long distance carrier they choose and to change carriers whenever they wish. Slamming takes choices away from consumers, often without their knowledge, and distorts the long distance competitive market by rewarding companies that engage in deceptive and misleading marketing practices. It is important for customers to select their own long distance company because different companies charge different rates.

The Commission vigorously enforces its rules prohibiting slamming. In recent years, the Commission has entered into two consent decrees in which the carriers accused of slamming agreed to make payments to the United States Treasury of up to $500,000. In addition, the Commission has issued a series of Notices of Apparent Liability (i.e., fines) for rule violations including allegedly forged Letters of Agency to change long distance carriers.

The Commission's current rules protect consumers who receive higher bills as a result of being slammed. These consumers are required to pay only the toll charges they would have paid to their original long distance carrier.

Letters of Agency (LOA): FCC rules require a long distance company to obtain a customer's authorization in order to change his or her long distance service. One method of obtaining this authorization is by a Letter of Agency (LOA), provided by a long distance company, in which the customer indicates, in writing, that he or she wishes to switch long distance companies.

Your Account Can Be Slammed In Any Number Of Ways:

The "Couch Potato" Slam: Your home or business can be slammed at any time, without provocation or warning. Check your bill every month, making sure that service is provided by the long distance carrier you have chosen.

Contest Rip-Offs: You may have noticed flyers promoting prizes such as a new car or a dream vacation or even an actual check. Look closely at the fine print before you fill out and sign an entry slip. Your signature can authorize a switch in your long distance service. Recipients of these LOAs often were unaware that by signing the document to enter the contest, to claim the prizes, or to cash the check, they also were authorizing a change in their long distance company. Minorities and recent immigrants are especially targeted, with contest information written in a native language, while the fine print may be in English.

Charitable Cons: You receive a form from what appears to be a charitable organization soliciting a donation, which would be charged to your phone bill. Read the form carefully! This could be a ploy to have you unknowingly change carriers. If you’d like to donate money to a charity, leave your phone service out of it and send a check (make it tax deductible.)

Unscrupulous Operators: You’re contacted by a high-pressure telemarketer offering big savings on your long distance calls. Even though you refused the offer completely or asked only for written information, your phone bill arrives and you’ve been switched. Slamming calls are placed not only to individuals but to businesses as well.

The 800 Slam: Many businesses provide 800 numbers as a convenience for their customers. And, given the high volume of calls made to toll-free numbers, they are particularly appealing targets for slammers. Offers for "terrific savings" can arrive by phone, over the fax, and through the mail. Check out all promotions with your long distance company, even those made by representatives claiming to be affiliated with them. Ask for written materials that fully describe the services offered. Listen to what information is being requested; account numbers, type of service and other information shouldn’t have to be supplied if the offer is really made through your long distance carrier.

1. The FCC's new rules require that LOAs, the forms authorizing a change in long distance carrier, be separate or severable from inducements such as prizes and contests. The LOA provided by the carrier must be limited strictly to authorizing a change in long distance carrier and it must be clearly identified as a LOA authorizing the change.

2. Further, the LOA must include: the subscriber's billing name and address and each telephone number to be covered by the order to change the subscriber's long distance company; a statement that the subscriber intends to change from his or her current long distance company to this new company; a statement that the subscriber designates this new carrier to act as the agent for this change; and a statement that the subscriber understands that there may be a charge for this change.

3. The LOA must be written in clear and unambiguous language and the print must be of sufficient size and readable style, generally comparable in type style and size to the promotional materials, and must make clear to the consumer that the document, when signed, would change his or her long distance carrier. Only the name of the long distance carrier setting the consumer's rates can appear on the letter of authorization. The LOA must contain full translations if it uses more than one language. The same rules apply to letters of agency sent to businesses.

4. Advertising promotions that use CHECKS are exempt from the separate or severable requirement but must meet specific guidelines. Such a check must contain the required letter of agency language and the necessary information to make it a negotiable instrument, and shall not contain any other promotional language or material. The carriers must place the required letter of agency language near the signature line on the back of the check. In addition, the carriers must print on the front of the check, in easily readable, bold-faced type, a notice that the consumer is authorizing a change in his or her long distance carrier.

The FCC has specific rules that govern customer orders for long distance service generated by telemarketing. Before a long distance company can place an order to switch a customer who agreed to sign up in a telemarketing call, that company must use one of the following methods to verify that the customer authorized the switch:

Obtain a LOA from the customer. Any LOA used to confirm a telemarketing order must meet the same requirements described above.

Provide the customer with a toll free (800) number to call to confirm the order to switch long distance companies.

Have an independent third party verify the customer's authorization to switch.

Within three business days of the customer's request to switch, send the new customer an information package that includes the names of the customer's current and new long distance companies, a description of any terms, conditions or charges incurred, the name of the customer that authorized the switch, the name, address and telephone number of the customer and of the new long distance company and a postage paid postcard the customer can use to deny, cancel or confirm the switch. The long distance company must then wait 14 days after mailing the information package before submitting an order to switch that customer's service.

Always read your telephone bill carefully. Be aware of which company you’ve chosen to provide you long distance service. If you see any unfamiliar names or charges you can't identify, call your local phone company and ask about these items.

Be cautious and read the fine print when filling out any entry form for a give-away. If you receive a phone call about long distance service and you are not interested in switching your service, be sure to tell the caller that you are not interested in receiving their service.

If someone sends you a letter or postcard verifying that you have switched services, notify them that you did not authorize the change, then call your local telephone company to confirm that you are still with your preferred carrier.

Be aware that anyone with a phone can be slammed. However; minority groups, senior citizens and recent immigrants are targeted in particular due to language barriers and high use of international long distance services.

In a place of business, route all calls or materials regarding telephone service only to the person(s) responsible for handling long distance services. Instruct all employees about possible phone slamming techniques.

By dialing 1-700-555-4141 or "00," on each of your phone lines, a recording will tell you who your long distance carrier is. If it’s not who you think it should be, contact your local phone company right away.

Ask your local phone company what measures can be taken to prevent your account from being slammed.

Never give information about your account over the phone - even if the person claims to be with your carrier. If they are with your carrier they already have the information.

Your local phone company provides basic service and may act as a billing agent for your long distance carrier. It is the responsibility of your local carrier to connect you to the long distance company of your choice. Any change in service happens through your local carrier.

Contact your local carrier (In the northeast, call Nynex at 718-890-1550 (Residential), 718-890-2600 (Business)) immediately and inform them that your long distance carrier has been switched without your consent. Make sure you are not billed for the switches ($10.00) and service with the company of your choice is resumed.

Ask to be "PIC restricted" or "non-transfer status" to your former (or long distance company of choice) carrier to prevent future slamming.

If slamming causes an increase in your long distance costs, contest excess charges with your local carrier. Submit a complaint outlining the unauthorized switch along with evidence of additional costs. Send copies to the long distance carrier that slammed you.

File a complaint with:

1) Your State’s Public Service Commission. In New York, call the NYS Public Service Commission Helpline at 800-342-3377. Get a Complaint #.

2) Write to:

Federal Communications Commission 202-632-7553.

Enforcement Division - Common Carrier Bureau

Room 6202

2025 M Street NW

Washington, DC 20554

3) In New York City, call the NY Atty. General - Consumer Complaints 212-416-8345 for complaint form.

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