Adopt an Anti-Slam Plan



While slamming was under-penalized in the late 1990s, federal and state law now provides for severe economic penalties against slammers. With FCC slamming penalties assessed at $40,000 per slam (and up to $80,000 in extreme cases) and FCC regulations requiring the unauthorized carrier to pay 150 percent of charges improperly collected to the slammed customer’s preferred provider, carriers which permit an undue level of slamming, even if accidental, face almost certain financial disaster. The average fine assessed by the FCC for slamming is about $1 million. The highest slamming penalty assessed by the FCC is a consent decree entered into for $3.5 million, and the lowest is a consent decree entered into for $55,000. In more egregious cases, corporate principals are individually banned from participating in the long-distance marketplace.

Fines and penalties on the state level can be even more crippling. For example, in 2002, the Florida Public Service Commission accepted a settlement offer from a major provider in the amount of $3.1 million. In 2001, the California Public Utilities Commission issued an order assessing a $7 million fine against a reseller for slamming and misrepresenting its relationship with local exchange carriers. In recent years, the New York Public Service Commission entered into a settlement agreement with an incumbent local exchange carrier for $1.75 million as a result of slamming. In at least one state, Michigan, the law has been shaped to give consumers a cause of action against providers which can be extremely profitable for the consumer. Under Michigan law, the Public Service Commission can order a slamming carrier to remit between 10 percent and 50 percent of any fine directly to the slammed consumer. With fines running up to $70,000 per slam, Michigan consumers have a strong incentive to pursue legal actions against slamming carriers.

Perhaps most troubling is the reality that enforcement action often does not occur in isolation. Typically, a bad telemarketing campaign that leads to slamming will occur across multiple states, leading to simultaneous enforcement actions in a number of jurisdictions, compounding the potential liability of a carrier. A “domino effect” is not uncommon as yet additional regulators, partially responding to political pressure, feel the need to investigate the company’s practices. The added prospect of defending multiple slamming enforcement actions, subject to differing state laws, along with multiplying legal fees can be daunting.


Given the high level of penalties issued by regulators against slamming, slamming has truly become a “zero-tolerance” activity. Carriers operating in today’s regulatory environment must implement systems that will absolutely eliminate slamming lest they face potentially devastating liability that could jeopardize their financial viability. The following minimum steps can help eliminate slamming:

Rules Compliance.

In order to comply and avoid liability, you must know the applicable law and rules. FCC and state slamming regulations are constantly in a state of change. For example, the FCC’s regulations were significantly modified last year and are likely to be changed again this year. Similarly, the slamming regulations of the various states are continually being modified. Moreover, many states have unique requirements that cannot be complied with by following the FCC’s rules alone. For example, Iowa law requires carriers to send a written notice to customers within 30 days of any carrier change. Massachusetts’ rules state that only verification companies registered with the Massachusetts Department of Telecommunications and Energy can be used to confirm carrier changes. Ensure that you have a copy of and understand current state and federal slamming regulations.

TPV and Sales Script Compliance Review.

The content of third-party verification scripts and telemarketing sales scripts is almost entirely regulated. That is, specific FCC and state PUC regulations dictate a substantial portion of the content and actual wording with respect to these scripts. In the case of the FCC and some states, failure to follow literal TPV language is considered to be a slam even if the customer apparently intended to switch to a new carrier. Scripts should comply not only with FCC and state slamming requirements, but also with applicable federal and state marketing law. Make sure all TPV and telemarketing sales scripts, including future updates, are reviewed in advance by counsel.

TPV Provider.

A legally-conscious TPV company is an important line of defense against slamming. Select a TPV company that demonstrates a high awareness of applicable FCC and state legal requirements. Remember, even in the case of a defective TPV, the carrier or reseller is responsible for the slam, not the TPV company. At a minimum, a TPV company should be able to offer legally-reliable verification scripts and procedures (including the ability to expeditiously supply the verification on CD-ROM or as an electronic file), as well as limited guidance when needed. Negotiate a strong agreement with your TPV partner which includes responsibility for compliant TPV scripts, updates and procedures. Finally, the TPV provider’s operations must comply with Section 64.1100 of the FCC’s regulations (i.e., not be managed, owned, controlled or directed by the carrier; not have a financial incentive to confirm orders; and operate in a location physically separate from the carrier or the carrier’s telemarketing agent).

Telemarketer Training. For many providers, regulatory enforcement actions and investigations flow directly from overly-aggressive marketing practices which fail to make clear that the customer’s carrier is being changed. The inevitable result is a slamming complaint. Telemarketers should be trained thoroughly regarding slamming laws. The use of both written material and live sessions are strongly encouraged to communicate this. Some telecommunications attorneys conduct compliance training sessions for corporate executives and telemarketers.

Create a Zero-Tolerance Policy for Telemarketers.

Carriers that do their own telemarketing should create specific rules for telemarketers that are designed to avoid misleading statements and slamming and establish a zero-tolerance policy towards slamming. The written policy should provide that the first instance of deceptive marketing or improper slamming will result in the employee’s termination. Have telemarketers sign employment contracts agreeing to be bound to the policy. Signs should be posted in telemarketing rooms reminding telemarketers of the carrier’s policies, including the zero-tolerance policy.

Complaint Reponses.

The difference between a carefully prepared complaint response and a careless form response can mean the difference between whether a slam is found to exist or not. Pay close attention to a slamming complaint from a regulator and respond specifically to what the complaint is seeking by the applicable deadline. For example, some regulators request a copy of the TPV while some do not. Similarly, ensure that the complaint response is submitted in the proper format and directed to the correct individual. Finally, beware of form complaint responses. Form responses, if carefully prepared, can work in some cases, but in many others can give rise to problems. For example, in complaints where the customer alleges fraud, misrepresentation, or that the person authorizing the sale did not have the authority to do so, a standard form response likely will be deficient and will need to be supplemented with additional responsive information. In short, avoid falling into the trap of routine form responses.

Seek a Drop-Off Exemption if Necessary.

In many slamming cases, technical limitations prevent telemarketing agents from properly dropping- off a sales call after transferring it to the TPV agent. When this occurs, the FCC’s rules have been violated and the transaction automatically will be deemed a slam. To avoid this, it may be possible in certain cases for carriers to file certifications with the FCC stating that their telemarketing agents are unable to effectively drop-off the sales call after initiating a TPV, thereby securing a legal exemption from the drop-off requirement. Submitting such a certification, a relatively simple step, can give a carrier added insurance against slamming risk.

Conduct Periodic Audits with Regulators.

Periodically (annually or semi-annually) contact FCC and state PUC staff to check the status of slamming complaints and foster a positive rapport with staff. Not only does this help ensure that the carrier is aware of existing complaints and gauge the “attitude” of regulators with respect to the carrier’s complaint levels, but it also demonstrates a degree of good faith to FCC and PUC staff.

Make Periodic Goodwill Visits to Meet with Regulators.

If you are aware of a particular slamming problem that potentially is a concern in a given state or before the FCC, proactive intervention often is the best course. A meeting with staff, typically set up through counsel, should be held to address the problem before it results in a show-cause order or issuance of a fine. Such an approach may go a long way in avoiding or mitigating enforcement activity (and the associated “domino effect”) for more serious slamming problems.

Avoid Hearings Where Possible.

Formal hearings may result in additional fines and most certainly result in higher legal expenses. FCC and PUC staff often seek to avoid hearings as much as carriers do. If a complaint has resulted in a PUC hearing, it most likely is because the carrier either has ignored or not adequately responded to staff requests. Extra effort should be taken to avoid show-cause hearings and to address matters before they progress to this potentially serious stage.

Compliance Audit.

A detailed legal review of all component factors is advisable for resellers and carriers which have encountered a recent spike in regulatory slamming investigations or whose anti-slamming practices have not been thoroughly reviewed by telecommunications counsel. This would generally cover, among other things, assessment of telemarketing practices (often the trigger for slamming complaints), telemarketing and TPV script review and assessment, TPV provider assessment and recommendations, complaint form and process review, and possibly a multistate compliance audit to identify trouble areas before they progress to the “point of no return.” A comprehensive compliance audit is a proactive, preventative step designed to avoid slamming problems before they might arise.

While slamming proves to be an insurmountable problem for some resellers and carriers, in certain cases forcing them out of business, it is surely an avoidable problem. By establishing an anti-slamming plan, composed at least of the steps outlined above, providers can steer clear of these dangerous risks.

Gregory E. Kunkle, Esq., and Thomas K. Crowe, Esq., are Washington, D.C.-based attorneys specializing in communications legal/regulatory matters. They can be reached at +1 202 263 3640, via e-mail at

Thomas K. Crowe Esq.

Leave a comment

Your email address will not be published. Required fields are marked *

The ID is: 70062