Minnesota Telecommunications Guide  

May 1998       

Slamming -- A Problem that Continues to Grow

Slamming -- the unauthorized changing of a customer's long distance service. The definition sounds innocuous enough, but the reality is anything but. Slamming often costs consumers money, and even when it doesn't, it costs them the time and hassle involved in switching back. Slamming costs long distance companies revenue they should have had. And slamming is a major problem for local phone companies, who must devote extensive resources to continually fix a problem that shouldn't exist.

Despite tougher state legislation and hefty fines issued by the FCC, slamming remains a "growth industry." It's the single-largest source of telephone-related complaints made to the FCC. And in U S West's 14-state calling area, slamming complaints doubled from 1994 through 1996, then doubled again last year to nearly 400,000. The number will probably top half a million this year. 

What Is Slamming? Why Does It Happen?

Basically, a consumer is slammed when their long distance carrier is switched without their permission. With the millions who willingly change their long distance company annually, some slamming is inadvertent. Numbers can be transposed when they're entered, for instance, or a household member may forget to tell others about a switch. There are also overzealous telemarketers and some dishonest consumers who use slamming as a way to avoid paying a bill.

But most slamming involves illegal or deceptive practices. Telemarketers from some unscrupulous companies say they're with "your phone company" or tell people they must switch carriers to keep receiving one bill. Some companies forge written authorizations or simply submit fraudulent changes to local phone companies. Some companies also use contest entry forms with a "hidden" purpose. Sign one and you authorize a switch.

Slamming is growing because it's still profitable. Many consumers don't notice the switch for a month or two (or more) because the slammer's name may seem familiar or sound generic, containing words like "long distance" or "monthly phone," according to Amy Brendmoen of the Attorney General's office. Mary Hisley, a spokesperson for U S West, says, "Slammers count on the fact most people don't check their bills too closely." And even if service is switched back and consumers end up paying at their original company's rates (which is usually lower), the slamming companies keep the money.

What's Being Done About Slamming?

Slamming is illegal and it's possible for slammers to go to jail, but it's basically a civil matter. The penalties are fines. The federal Telecommunications Act of 1996 and Minnesota statutes say that slammers shouldn't benefit from slamming, but many do in the real world. FCC rules implementing the '96 law haven't been issued yet (they should be soon) and enforcement is difficult. "Slamming is no different than any type of consumer fraud," says Scott Wilensky, a state assistant attorney general. "Because our budget is limited, we can only pursue some cases through the courts. We resolve others through mediation, but some go unresolved."

Minnesota has recently enacted statutes that are tougher than federal laws. If a long distance company can't prove it has a Minnesota consumer's authorization, for example, consumers don't have to pay the bill. And if long distance companies verify a change using a "negative checkoff" system, they must record the customer's original voice authorization. (In a negative checkoff, a carrier sends you a confirming letter or card -- it may look like junk mail -- saying you're switched. If you don't cancel by calling or sending it back, the change goes through.) The '98 Legislature also requires telemarketers, among other things, to confirm that consumers understand they're changing carriers, are authorized to make that change and agree to it. 

The FCC has taken some strong actions against slammers recently, imposing some big fines on violators and even revoking the license of one company. As the FCC develops new rules, the telecommunications hopes some of its ideas are adopted. U S West hopes consumers who have been slammed will be allowed to pay their original long distance company, eliminating a key incentive for slamming. Sprint wants the commission to consider adding a neutral third party with some discretion in processing customer changes from long distance companies who have slammed customers in the past. Sprint also suggests that slamming would be eliminated if customers could change companies themselves using special codes. 

What Can Consumers Do?

If consumers suspect they've been slammed, they can call 1-700-555-4141 (it's free) to verify the identity of their long distance company. If they discover or know they have been slammed, they should call their local phone company, which will switch them back to their previous long distance carrier and remove any "change charges." Local companies will usually help get a customer's rates changed so they only pay what they would have if they had never been switched. Consumers can also call the slamming company to let it know that's all they will pay and call their original company to have service restored at no charge. Unresolved complaints with slammers should be referred to the Attorney General's office or the FCC.

To save time and money, and to avoid losing service features or premiums like frequent flier miles, consumers need to make slamming harder to do. Here are U S West's tips to consumers (slightly adapted) to protect themselves against slamming:

-- Know who's calling. If you're interested in an offer, get a number to call back. ("If you can't get a number, it's not a good deal," says Brendmoen.) If a caller claims to be with your local phone company but you're not sure, call your local provider. -- Just say no. If a telemarketer asks you to switch and you don't want to, just say no. If they persist or become rude, hang up. -- Read before you sign. Read the fine print before you sign anything because your signature may authorize a long distance switch. -- Be careful of contests. Some entry forms are tricky ways to get you to switch your long distance service. Read the whole form. -- Don't cash that check. Some companies pay you to switch to their service. If you're interested, cash their check. If not, tear it up and throw it away.

And lastly, most local phone companies let customers freeze their long distance service at no charge. With a "PIC-freeze" in place, only customers can change their long distance themselves and only by directly contacting their local service provider.      

PROFILE: InfoTel Communications LLC

The telephone business is in the Arvig blood -- InfoTel Communications LLC, Baxter, is just the latest example. Grandfather Louie Arvig founded Arvig Telephone Co., Pequot Lakes, in 1919. His son Gilroy, now an InfoTel owner, ran the family holding company, Arvig Telcom, for over 40 years until its 1994 sale to TDS Telecom. By then, the company included Bridgewater Telephone Co. (Monticello); USLink, a long distance carrier; and a cable TV company.

With the 1997 formation of InfoTel, grandson Greg, who was founder and president of USLink, continues the family tradition as president and part owner of InfoTel. One of the state's first competitive local exchange carriers (CLEC), a designation created by the federal Telecommunications Act of 1996, InfoTel is also the first outstate Minnesota company to combine local, long distance and Internet services in a package. InfoTel already boasts 4,000 business and 5,000 residential customers, approximately 7,500 local lines, and 35 employees. It also continues a tradition of community service, providing a free 800 volunteer coordinator helpline in St. Peter following the recent tornados and actively supporting the Brainerd-area Confidence Learning Center for kids with special needs.

InfoTel is an example of how competition is changing local phone service. It primarily resells its local service now, with its heaviest customer concentrations in Brainerd, St. Cloud and northern Minnesota. But it has begun serving some customers directly through its first local switch (in St. Cloud) and will expand this service through "remotes" in Brainerd, Duluth and Fargo. "Competition is good for customers because they get lower prices and services they couldn't get before," says Greg Arvig. "The industry is changing dramatically. The successful companies will offer service packages that match customer needs."

Minnesota Fact Minneapolis is America's "most wired big city", with the nation's highest density of networked computers, according to Matrix Information and Directory Services (MIDS), an Austin,Texas company that tracks Internet use. In a separate study reported by Yahoo! Internet Life, Minneapolis ranks as the 6th most wired big city, when looking at several indicators such as the number of Internet users, hosts per capita, domain density, backbone traffic and directory density.  Yet another index, from International Demographics, puts Minneapolis/St. Paul at 16th in the top 50 'Net markets, with 664,000 Internet users.