Posted: 01/2000
Proof Positive
Third-Party Verifiers Help Carriers Fend Off Fraud
By Liz Montalbano
With all the haggling over slamming and cramming that ensued in 1999--including the FCC's adoption of the toughest anti-slamming rules to date in April with its Truth in Billing Requirements--the fact remains: Carriers and resellers still are charging customers for services they don't want and switching customers' service providers without their knowledge or consent.
In fact, last fall the FCC (www.FCC.gov) fined Qwest Communications International Inc. (www.qwest.net) $2.1 million for 30 violations involving forged signatures and other fraudulent activity by Qwest customer service representatives (CSRs), resulting in customers being switched to the carrier without their consent or knowledge. Later that week, according to ABC News, the Denver-based carrier fired nine CSRs for their involvement in unscrupulous practices. Unfortunately, that didn't completely solve the carrier's troubles. Only a month later, it again found itself in hot water when the state of Connecticut filed a lawsuit against the company for alleged slamming, seeking "hundreds of thousands" of dollars, according to the suit, which still is pending.
Such unscrupulous activity indicates one of two things: either service providers still aren't taking advantage of the host of third-party verification (TPV) services available to them, or the TPV solution they are using just isn't secure enough to ensure fair business practices.
Even though it's not a panacea for keeping consumers from getting crammed or slammed (nor for keeping carriers out of litigation over such offenses), TPV remains the best option to accomplish these goals. While the FCC has mandated verification for switching service providers, it does not clearly spell out ways to ensure that such verifications are legitimate or require verifications for new sales of every type of service.
So far, it has been up to the states to reinforce the law within their own jurisdiction to prevent slamming and cramming. And according to Larry Leikin, vice president, sales for TPV provider VoiceLog LLC (www.voicelog.com), there is still room for fraudulent practice at the state level.
To date, he says, only Texas has mandated that all services placed on a phone bill must be third-party verified, and California ruled that all letters of agency (LOAs) must be verified by a third party before a switch or charge is added to a customer's bill. This means the industry as a whole is still a long way from eliminating such complaints altogether, he says.
"Slamming is still a very big problem, as is cramming," Leikin says. "One of the biggest problems is that orders can still be submitted everywhere except California without any type of verification whatsoever. So if I want to perpetrate fraud, I can sit here with a stack of LOAs, fill them out and submit them to the carrier and they're going to get through."
Nelson Gross, general manager for Millennium TPV Technologies (www.millenniumtpv.com) agrees, adding that some carriers may feel the need only to do the minimum of what regulations require--the actual verification of the order itself--rather than actually ensure the verification is legitimate.
"There's plenty of damage being done," Gross says. "Our feeling is that verification companies--I don't fault them for what they do, but they're looking at, 'Hey, what do we have to do to conform to the regs? What does the service provider need to do to conform to the FCC or PSC (public service commission) or even LEC (local exchange carrier) requirements?'"
Gross says that instead, verification companies should take the approach he believes Millennium promotes. "You can satisfy the regs, but if you want to make money as a service provider, your customer has to be willing to pay for the service, which means they have to know they bought it and it has to be properly represented," he says. "You can't make money if you allow these games to continue."
TPV Options
TPV as it stands today basically consists of three parts: the actual verification itself, whether live or automated, which is usually recorded; a validation of that recorded verification in which another person listens to ensure legitimacy; and reporting, usually daily and weekly, which gives the service provider detailed information about its agents and keeps the service provider abreast of any fraudulent activity.
Callback services, in which a third-party verifier makes an outbound call to the customer after a verification is made, can be added to these elements to further ensure sales are legitimate.
According to Leikin, VoiceLog uses an automated front-end combined with live operator validation of those verifications and daily reporting to protect its clients from slamming and cramming violations. He says about 20 percent of VoiceLog's client base also uses a callback service, which happens within 10 seconds of the recorded verification.
"Because of the immediacy of the callback, clients can expect to confirm over 95 percent of their callback orders," Leikin says.
Millennium's solution uses an automated front end as well, and Gross says the company recently developed a solution called Verbatim Recall for its automated system. This means not only are the customer's answers to the automated system recorded, as is usually the case with verifications, but the system also records the automated questions it asks the customer. This means if a service provider's CSR tries to distract the customer from the recorded questions by talking over them, the system will have that violation on tape.
"From the time the representative ... [starts] the platform, it records everything that happens 100 percent from beginning to end," Gross says. "So if anyone's talking while the platform's talking, it's recorded.
Millennium then has agents validating all the verified calls, and offers detailed reporting to its clients. The company also is, according to Gross, "a very big proponent of the callback," urging that customers not only verify, record and then validate calls, but also utilize a callback to guarantee the service orders are legitimate.
Another TPV provider, PriceInteractive (www.priceinteractive.com), goes a step further than the typical interactive voice response (IVR) automated system--it uses speech recognition to enhance its automated front-end verification, which also is recorded. PriceInteractive agents then listen to those speech recognition-verified calls and, if there is a discrepancy in what the system recorded and what the live agent hears, the call is saved and is available for the carrier to review in case fraudulent activity is reported.
Two other verification companies--Advanced Data-Comm Inc. (www.advanceddata.com), formerly Verifications Plus, and Teltrust Inc. (www.teltrust.com), mainly provide live operator verifications, although both also can provide automated verifications if a client so chooses.
"We have offered the option of either live or IVR (interactive voice response) to our clients and the clients that we work with prefer the live option," says Tim Duggan, senior account executive for Advanced Data-Comm.
When a customer uses Advanced Data-Comm's automated system, he adds, it also gets the backup of live validation of the recorded verifications, of which daily reports are made.
Eric Stein, vice president of business development for Teltrust, also says "most of my customers want live verifications," although the automated option is available to them as well. Both Teltrust and Advanced Data-Comm also offer their clients live-agent validation of verifications.
Live vs. Automated Verification
While an individual TPV provider will insist its solution for verification is secure, there's much debate over which method actually is best to ensure slamming and cramming violations do not occur.
As mentioned above, automated and live-operator TPV both are options for carriers and resellers looking for solutions. Deciding which is best of course is up to the individual service provider, but proponents on both sides do offer some food for thought.
Stein of Teltrust is a cheerleader for live-operator verifications, believing it's the most secure way to verify service orders. If you don't believe him, ask his customers, he says.
"Clients using our automated system discovered they weren't getting as high a verification rate as they were with live verifications," Stein says. He says that 50 percent or 60 percent of the time, customers would "opt out" of the automated system before the verification was complete. With live verifications, he adds, his clients find that customers complete the verifications about 80 percent to 90 percent of the time.
Advanced Data-Comm's Duggan, too, is a proponent of live verification vs. automated systems. "There's less chance for fraudulent activity because hopefully a live operator can distinguish between the sales rep and the customer's voice," Duggan says. "With the IVR system, you have no idea who's speaking, no idea who's punching in the numbers."
Duggan also adds that from a customer service perspective, his clients would rather that a new customer switching to their service experience live interaction with the company rather than simply being passed off to an automated system once they've made the commitment to the service.
"They've made some investment in acquiring an account and they just feel it's a better level of customer service [and that] the very first contact with the company should be with a live person," Duggan says.
According to Stein, cost, too, "seems to be a major factor." Live verifications tend to be more expensive than automated ones--about $2 per call vs. $1.30 or so for automated verifications--which often is the incentive for service providers to go with an automated system rather than incur the expense of live operators.
Millennium's Gross says that his company's Verbatim Recall solution has solved the cost problem, combining the security of live operators--since even the automated system's questions are being recorded and later verified in case a CSR tries to interfere--with the lowered cost of an automated system.
"It (Verbatim Recall]) makes our automated verification better than live for the same reason people think live's better than automated," he says. "It's more expensive than standard verification--about $1.50 to $1.75 per call--but it makes it more cost-effective than a live verification."
Dan Price of PriceInteractive also feels his company's combination of a speech recognition-enhanced IVR system combined with live validation of the recorded verifications are more efficient and secure than live verifications. With live agents, according to Price, there's room for human error and the chance that the agent "might get into a chit-chat with the customer," putting strains on cost efficiency. Other good news for service providers interested in the PriceInteractive solution, according to Ken Rokoff, vice president of sales and marketing for the comapny: It costs about 50 cents per call, one of the least-expensive solutions on the market.
But while PriceInteractive officials ensure the speech recognition aspect of its product is secure and provide live-agent backup to validate, VoiceLog's Leikin himself isn't convinced enough to use the technology in general.
"The problem with speech recognition--it's more than just the 'yes's and the 'no's you have to confirm," he says. "Somebody has to be on the line that has a valid name. If you're only using speech recognition and someone gives their name as 'Mickey Mouse,' speech recognition is not going to detect that that's an invalid name."
To Call (Back) or Not To Call (Back)
According to Millennium's Gross, any doubts about the security of any TPV system a service provider chooses can almost be dispelled by one thing: the call back.
"The fact is, without a call back, there's going to be fraud, your customers aren't going to know what they're getting and you're going to have recourse, inquiries, problems and that's not a way to build a business," Gross says.
While most TPV providers often offer call-back services--for an extra fee--on automated verifications, live-operator verified calls don't always get that extra attention. In fact, Advanced Data-Comm's Duggan concedes that, even though Advanced Data-Comm got its start as a callback company in 1992, "with a live operator, you really don't need callback." He does add, however, that currently for "a couple of clients ... we do a live-operator inbound [verification] and then also do a live outbound call-back."
Teltrust's Stein also thinks call-back is a good idea, but he again mentions the cost factor that inhibits some service providers from using the service. "Call-back services add more to the cost," he says, "[and] some people are cheap and don't care about slamming."
He adds that some of what he calls Teltrust's "risqui" clients not only will conference the TPV operator in for verifications, but also will have an operator immediately call the customer back after the verification to ensure the legitimacy of the service order.
Liz Montalbano is news editor for PHONE+ magazine.
