#########  Before the

#########  FEDERAL COMMUNICATIONS COMMISSION

**Washington, D.C. 20554**

In the Matter of )

) File No. ENF 98-02

Business Discount Plan, Inc. )

) NAL/Acct. No. 916EF0004

Apparent Liability for Forfeiture )

**ORDER OF FORFEITURE**

Adopted: June 30, 2000 Released: July 17, 2000

By the Commission: Commissioner Furchtgott-Roth concurring in part and
dissenting in part, and issuing a separate statement.

**I. INTRODUCTION**

1 In this Order, we assess a forfeiture of \$2,400,000 against Business
Discount Plan, Inc. ("BDP") for willful or repeated violations of the
Communications Act of 1934, as amended (the "Act"), and our rules and
orders. We find that BDP willfully or repeatedly violated section 258 of
the Act and the Commission's rules and orders by changing the preferred
interexchange carriers ("PICs") designated by thirty consumers without
their authorization, a practice commonly referred to as "slamming."
Additionally, we find that BDP willfully or repeatedly violated section
201(b) of the Act by using unjust and unreasonable telemarketing
practices in connection with its slamming violations, such as
misrepresenting the nature of BDP's service offering.

**II. BACKGROUND**

2 The facts and circumstances leading to the issuance of our December
17, 1998 Notice of Apparent Liability ("NAL") are fully recited in the
NAL and need not be reiterated at length.[^1] Between December 1997 and
October 1998, the Commission processed thousands of written consumer
complaints alleging slamming by BDP.[^2] The Commission investigated
thirty of these complaints. Each complainant contended that BDP had
converted his or her designated PIC without authorization, and that BDP
used unjust and unreasonable telemarketing practices in effecting these
unauthorized PIC changes. All thirty complainants provided sworn
statements and evidence in support of their complaints.

3 Following an investigation of the above complaints, which included an
opportunity for BDP to respond to the allegations raised by
complainants, the Commission issued the *BDP NAL*. We found that BDP's
failure to obtain complainants' authorization before submitting
PIC-change requests apparently violated section 258 of the Act[^3] and
the Commission's rules and orders against slamming.[^4] In addition, we
determined that BDP, prior to effecting the unauthorized conversions,
apparently represented or implied to the complainants: 1) that it was
affiliated with the consumers' existing local or long distance carriers;
and 2) that its service consisted of a "discount plan" that would
consolidate the consumers' local and long distance charges on one bill
for the consumers' convenience, without changing the consumers' existing
long distance carriers.[^5] Neither of these claims was true.
Accordingly, we determined that BDP's deceptive telemarketing practices
evidenced apparent violations of section 201(b) of the Act.[^6]

4 In view of the facts and circumstances surrounding BDP's apparent
violations, we found that BDP was apparently liable for a proposed
forfeiture of \$40,000 for each of the unauthorized conversions, and an
additional \$40,000 for each instance in which it employed unjust and
unreasonable telemarketing techniques with respect to each of the thirty
complainants, resulting in a total forfeiture amount of \$2,400,000.[^7]

**III. DISCUSSION**

5 In its Response to the NAL, BDP does not deny that it submitted
PIC-change orders to the complainants' local exchange carriers.
Nevertheless, BDP contests the Commission's finding of apparent
liability for willful or repeated violations of sections 258 and 201(b)
of the Act, as well as the Commission's rules and orders. Regarding the
apparent slamming violations, BDP argues that it should not be found
liable because: 1) section 258 was not yet effective at the time of the
alleged slamming conduct; and 2) even if section 258 was effective, BDP,
with one exception, properly verified the complainants' PIC changes.
With respect to the apparent 201(b) violations, BDP asserts that it
should not be found liable because: 1) section 201(b) does not impose
any duty on common carriers to be truthful in their promotional
practices; and 2) even if section 201(b) provides a cause of action
against BDP for unjust and unreasonable marketing practices, BDP did not
engage in such fraudulent practices. BDP also contests the amount of the
proposed forfeiture as excessive. As discussed below, we reject each of
BDP's arguments.

######### A. Imposition of a Forfeiture Pursuant to Section 258 and the Commission's Rules and Orders

6 BDP argues that it cannot be held liable for the alleged slamming
violations because section 258 of the Act was not effective at the time
of the alleged slamming conduct.[^8] BDP correctly asserts that the
Commission's proposed rules to implement section 258 had not been
adopted, and thus were not "prescribed,"[^9] at the time of BDP's
alleged slamming violations. While acknowledging that the Commission had
other regulations in place at that time that established verification
procedures for the submission of PIC changes, BDP contends that these
regulations were not promulgated under section 258 and thus cannot form
the basis for BDP's liability.[^10]

7 We reject BDP's arguments. As an initial matter, BDP's slamming
conduct violated the Commission rules and orders in effect at the time
of the activity at issue. These rules and orders stated that prior to
submitting PIC changes, *interexchange carriers* such as BDP were
required to obtain consumers' authorization for changes in long distance
service, and then verify those authorizations in accordance with the
telemarketing verification procedures delineated in the rules.[^11]
Although the adoption of these rules and orders predated current section
258, these rules and orders nevertheless applied to the conduct at issue
in the *BDP NAL,* and were expressly referenced therein.[^12]

8 Moreover, we disagree with BDP's assertion that, because our rules
implementing section 258 had not yet become effective at the time of the
activity at issue here, the Commission was somehow barred from enforcing
its existing rules against slamming. In section 258, which became law on
February 8, 1996, Congress expanded the Commission's slamming prevention
authority[^13] to encompass not only long distance service, but also
*local exchange service*, and to include telecommunications
carriers[^14] who *execute* changes in subscriber's provider selections,
as well as carriers who submit such changes.[^15] In December of 1998,
the Commission strengthened its existing verification rules and added
new verification procedures for local exchange carriers.[^16] The
majority of these new rules took effect on April 27, 1999.[^17] While
BDP is correct in asserting that at the time of the conduct here at
issue, the new verification rules had not yet become effective, we
reject BDP's contention that Congress intended to make our existing
rules ineffective by enacting section 258. BDP cites nothing in the Act
or the legislative history of section 258 that would indicate such an
intention. Indeed, the legislative history reflects Congressional intent
to strengthen and expand the Commission's authority over slamming -- not
vitiate our existing safeguards.[^18] BDP's suggested result would have
left consumers without any protection against slamming while we
conducted a rulemaking pursuant to section 258.[^19] We decline BDP's
invitation to read such a counter-intuitive meaning into this provision.

9 Nor do we find merit in BDP's argument that the Commission cannot
enforce section 258 in the instant proceeding. Even *without* new
verification rules, section 258 provides the Commission with an
independent basis for addressing BDP's conduct. Indeed, we relied on
section 258 in previous enforcement actions for slamming that occurred
prior to the adoption of our new rules.[^20] In these earlier actions,
the Commission enforced section 258 based on our determination that the
subject carriers violated our *existing* verification rules by
submitting unauthorized PIC changes for long distance service.[^21]
Hence, violation of our existing rules constituted a violation of the
requirement in section 258 that carriers cannot submit or execute a
change in a subscriber's selection of a provider of telephone exchange
service or telephone toll service "except in accordance with such
verification procedures as the Commission shall prescribe."[^22]
Likewise, in the instant proceeding, we find that BDP violated section
258 with conduct that was already within our jurisdiction and subject to
the Commission's existing slamming rules.[^23]

10 We also reject BDP's suggestion that the language "*shall* prescribe"
in section 258[^24] evinces a legislative intent that section 258 would
not become effective until the Commission established new verification
rules. Contrary to BDP's contention, we read this prospective language
as directing the Commission to strengthen its existing verification
procedures and add verification procedures for local exchange carriers,
without affecting the fundamental prohibition against slamming in our
existing rules or the verification procedures set forth therein.
Moreover, it is well-established that unless a statute specifies an
effective date, it is effective upon the date of its enactment.[^25] As
noted above, section 258 became law on February 8, 1996 -- prior to the
date of the slamming violations at issue here.[^26]

11 BDP contends that even if section 258 was effective at the time BDP
switched the complainants to its long distance service, BDP properly
verified the complainants' PIC changes.[^27] BDP offers four arguments
in support of its position. First, BDP claims that, except for one
verifier who "inadvertently switched complainant Part Time Productions,
Inc. by punching the wrong button,"[^28] BDP did not convey the false
impression that it was performing only a bill consolidation
service.[^29] Second, BDP argues that twenty-five of the complaints are
unreliable because the Commission failed to obtain sworn statements from
these complainants.[^30] Third, BDP maintains that its verification
companies were independent and physically separate from BDP, as required
by the Commission's rules.[^31] Finally, BDP denies that it misled
consumers, observing that less than 1 percent of them asked to be
switched back to their prior long distance carriers upon receipt of
BDP's letter explaining that it is not affiliated with AT&T.[^32]

12 BDP's arguments must fail in light of the express terms of section
258 and our existing rules and orders. For purposes of determining BDP's
liability under either, we need only decide: 1) whether the complainants
authorized the PIC changes and, if not, 2) whether BDP submitted these
unauthorized PIC changes to the complainants' local exchange carriers.
As noted above, BDP concedes that it submitted the PIC changes in
question.[^33] Further, all 30 complainants have submitted sworn
statements attesting that they did not authorize the PIC changes, and
BDP has submitted no countervailing evidence to convince us otherwise.
Indeed, as discussed in the *BDP NAL*, the record clearly demonstrates
that BDP created the false impression that it was offering a bill
consolidation under the auspices of the consumers' existing AT&T
service. Even if, as BDP claims, its verifiers mentioned *toward the
end* of the call that consumers would be "remaining on the AT&T network"
and changing to BDP "for inter and intra LATA calls," such statements
are not meaningful because the greater part of the call focused on a
"simplified billing format " for AT&T customers,[^34] *not* a change in
long distance carriers.[^35] We affirm our prior determination that BDP
knew, or should have known, that consumers acting reasonably under these
circumstances would be misled or confused by BDP's telemarketing calls
and that therefore, consumers were not authorizing a PIC change.[^36]

13 We also reject BDP's claim that the record fails to support the
proposed forfeiture. Contrary to BDP's claim, all 30 complainants
submitted sworn declarations in support of their complaints, and all of
these declarations were included in our record.[^37] BDP's remaining
assertions,[^38] even if valid, are irrelevant to our determination that
BDP violated section 258 and our rules and orders governing preferred
carrier changes. First, even if we assume that BDP's verification
companies maintained an independent status, the record nevertheless
shows that those companies were acting on behalf of BDP, such that BDP
is liable for their actions.[^39] Second, BDP's claim of "customer
loyalty" in the wake of its "mailing" does nothing to obviate our
conclusion that BDP deceived and slammed at least 30 consumers in the
first instance.

######### 

#########  Imposition of a Forfeiture Pursuant to Section 201(b)

14 BDP contends that it cannot be held liable under section 201(b)
because the \"Act does not impose any duty on common carriers to be
truthful in their promotional practices.\"[^40] To support its position,
BDP cites state preemption cases in which courts have held that the
Communications Act does not indicate a "uniquely federal interest" in
common carriers' unfair and deceptive telemarketing practices, so as to
"preempt" state efforts to prevent these practices. BDP argues that
because the courts have not found a uniquely federal interest, section
201(b) does not provide a cause of action for addressing the
reasonableness of common carriers' deceptive telemarketing practices.

15 We disagree, and affirm our prior determination that BDP's deceptive
telemarketing practices constitute "unjust and unreasonable" practices
within the meaning of section 201(b). First, section 201(b) prohibits
"unjust and unreasonable" practices by common carriers "in connection
with" communication service.[^41] The record demonstrates that BDP's
telemarketers repeatedly deceived consumers as to BDP's identity and the
nature of its service, rendering BDP's telemarketing practices "unjust
and unreasonable." These telemarketing practices were related directly
to BDP's efforts to provide long distance service to the complainants,
and thus were clearly \"in connection with\" BDP's communication
service. Hence, we conclude that such practices are subject to the Act's
section 201(b) "just and reasonable" standard.

16 Second, we reject BDP's reliance on state preemption analyses to
support its claim that its marketing practices do not constitute unjust
and unreasonable practices under section 201(b) of the Act. Even if we
accept BDP's argument that the Commission lacks a "uniquely federal
interest" in preventing slamming,[^42] BDP has presented no evidence or
arguments to persuade us that the Commission therefore lacks authority
to declare a deceptive marketing practice "unjust and unreasonable"
under section 201(b). We need not have a "uniquely federal interest" in
preventing such marketing practices in order to exercise our section
201(b) jurisdiction. Moreover, the use of section 201(b) to address
unreasonable marketing practices by common carriers is not new. In 1992,
the Commission stopped short of finding that AT&T had violated section
201(b), but cited the provision in admonishing AT&T concerning credit
card marketing practices that had created significant customer
confusion. The Commission noted there that AT&T "reasonably should have
realized that many members of the general public . . . were, or could
readily have been, misled . . . to their detriment . . ." by these
marketing practices.[^43] Moreover, in 1989, the Commission's Common
Carrier Bureau determined that several carriers had violated section
201(b) by engaging in "unjust and unreasonable" business practices, such
as "failing to convey sufficient information as to the carriers'
identity, rates, practices, and range of services."[^44] As in these
earlier proceedings, the *BDP NAL* properly relied on section 201(b) in
addressing the marketing practices at issue, and we do so here.[^45]

17 BDP next argues that even if section 201(b) provides a cause of
action for \"misleading, deceptive and/or fraudulent telemarketing
practices, BDP did not engage in such practices.\"[^46] In support of
its argument, BDP advances numerous reasons why it believes the
Commission's section 201(b) analysis is flawed. We find all of these
reasons legally insufficient and factually irrelevant to our
determination that BDP's telemarketing practices deceived consumers in
violation of section 201(b). As an initial matter, we reject BDP's claim
that it "unequivocally" informed complainants that they would be
changing to BDP as their long distance carrier. To the contrary, and as
noted above, the record contains clear and credible evidence that BDP
conveyed the overall impression that consumers were confirming a new
billing format offered by their existing carriers \-- not a change in
interexchange carriers.[^47] We, therefore, affirm our prior
determination that BDP's telemarketers unlawfully deceived consumers
about the identity of the carrier and the nature of the service offering
by telling them that they would be "remaining on the AT&T network."

18 BDP contends that it was not legally required to disclose "that its
rates were 20% higher than AT&T's rates." Our NAL never suggested such
an obligation. Rather, we found BDP's omission misleading in the context
of telemarketing calls that focused on enrollment in a "discount plan."
BDP also defends as reasonable its decision to target AT&T customers
with low monthly bills, contending that these consumers "would readily
pay BDP's higher rates to obtain the convenience of consolidated
billing." Like many of BDP's claims, we find this assumption about
consumer behavior irrelevant to the central question of whether BDP
misrepresented or unreasonably implied an affiliation with AT&T. Nor do
we find merit in BDP's arguments that it: 1) in fact provided
consolidated billing to consumers; or 2) never told consumers that its
service consisted "solely" of consolidated billing. As stated above, we
have examined both the specific claims made by BDP in its telemarketing
calls, as well as the net impression created by those calls. Whether BDP
actually provided consolidated billing, in keeping with its sales
pitch,[^48] is irrelevant to the question of whether BDP violated
section 201(b) by tricking the complainants into changing their long
distance carriers. Further, even if BDP never specifically stated that
its service consisted "solely" of consolidated billing, the record
contains substantial evidence that BDP conveyed the false overall
impression that it was offering only a simplified billing format.

19 For similar reasons, we reject BDP's claim that we improperly based
our forfeiture on BDP's failure to tape its sales solicitations.[^49]
Contrary to BDP's contention, we never stated that BDP was obligated to
tape its sales calls. Rather, we concluded that there was no evidence or
information, including any tape recordings, to counter the complainants'
allegations of unjust and unreasonable telemarketing practices.[^50] Nor
did we give undue consideration to the effect of the "Business Discount
Plan" name, [^51] or to items included in our "background" section, such
as our reference to state actions against BDP.[^52] Commission documents
often note the existence of other legal proceedings against the carrier
at issue.[^53] Further, BDP's company name was just one of many factors
we considered in our section 201(b) analysis.

20 Finally, we reject BDP's attempt to blame consumers' confusion on
AT&T's "provisioning delays."[^54] Given our substantial evidence of
BDP's deceptive practices, it strains credibility to suggest, as BDP
does, that delays in provisioning caused consumers to "forget" they had
ordered BDP's service and "mistakenly" complain to federal and state
regulatory agencies that BDP had slammed them."[^55]

#########  Appropriateness of Assessed Forfeiture Amount

21 BDP next argues that even if it slammed the consumers at issue, the
Commission's proposed forfeiture is unconstitutionally excessive because
it is greatly disproportionate to the gravity of BDP's offense.[^56] BDP
further claims that assessing a \$40,000 penalty for each of the
slamming and section 201(b) violations is inconsistent with the
Commission's *Forfeiture Policy Statement*.[^57] Finally, BDP maintains
that one of the complaints supporting our proposed forfeiture, the
"Michael Cherney" Complaint, is barred by the Act's statute of
limitations. We disagree with BDP's arguments, and affirm our prior
determination that a \$2.4 million forfeiture is appropriate.

22 We find no merit in BDP's claim that our proposed forfeiture is
disproportionate to the gravity of BDP's offense. The proposed
forfeiture is based on thirty independent slamming complaints against
BDP \-- out of numerous complaints filed with the Commission \-- and
rests on a calculation of \$40,000 for each unauthorized preferred
carrier change conversion and \$40,000 for each instance in which BDP
engaged in an unjust and unreasonable telemarketing practice. Contrary
to BDP's claim, these forfeiture amounts are consistent with the
forfeiture guidelines established in the *Forfeiture Policy Statement*,
and with our broad discretion under section 503 of the Act to implement
these guidelines by issuing forfeitures on a case-by-case basis.[^58]

23 First, we assessed the *standard* \$40,000 amount established in the
*Forfeiture Policy Statement* for slamming violations, even though it
was within our discretion to apply the "upward adjustment criteria" in
the forfeiture guidelines to issue a higher forfeiture amount.[^59] In
other proceedings involving similarly egregious slamming activity, the
Commission has applied the upward adjustment criteria to calculate
forfeitures of *double* the standard amount applied for slamming
violations (*i.e.,* \$80,000).[^60] Second, BDP has presented no
credible evidence that it was unreasonable for the Commission to
exercise its broad discretion and use the standard amount for slamming
violations as an appropriate guideline for assessing \$40,000
forfeitures for each of the section 201(b) violations. Although the
*Forfeiture Policy Statement* does not establish a specific forfeiture
amount for violations of section 201(b), it states that "any omission of
a specific rule violation . . . should not signal that the Commission
considers any unlisted violation as nonexistent or unimportant."[^61] As
we explained in the NAL, BDP's deceptive telemarketing practices were
"aimed at slamming consumers."[^62] Accordingly, we found that, under
the circumstances, the standard \$40,000 forfeiture amount for slamming
violations was an appropriate guideline to use in assessing penalties
for the section 201(b) violations.[^63] BDP has presented no evidence to
convince us that we erred in reaching this conclusion.[^64] Likewise, it
was proper to treat BDP's conduct as separate violations of our slamming
rules and section 201(b) of the Act. There is nothing in the Act, the
*Forfeiture Policy Statement*, or any other Commission order to prevent
us from finding section 201(b) violations based conduct related to
slamming.[^65] We reject BDP's assertion that "deceptive and fraudulent"
conduct such as slamming can only be punished under section 258 of the
Act. [^66] The Commission possesses broad discretion to assess penalties
for slamming and/or section 201(b) violations on a case-by-case basis.

24 We also reject BDP's assertion that our forfeiture authority is
circumscribed by the "aggregate damages sustained by complainants,"
which BDP lists as \$12,144.53.[^67] The *Forfeiture Policy* Statement
establishes a \$40,000 base amount for slamming violations, without
reference to the consumers' aggregate damages. Moreover, BDP fails to
recognize that its repeated acts of slamming did more than "rob" the
complainants of \$12,144.53; it violated their right to select the
telecommunications providers of their choice and deprived the authorized
carriers of their customers. The Commission has taken and will continue
to take swift and decisive enforcement action, including the imposition
of substantial forfeiture penalties, against carriers found to have
engaged in slamming.[^68]

25 Further, contrary to BDP's contention, the "Michael Cherney"
Complaint is within the one-year jurisdictional period contained in
section 503(b)(6)(B) of the Act.[^69] Indeed, BDP's counsel filed a
letter with the Commission stating that Michael Cherney's service was
switched to BDP on December 22, 1997, [^70] which was less than a year
before December 17, 1998, the date the *BDP NAL* was issued. We also
dismiss as unsubstantiated BDP's argument that we should reduce the
amount of the forfeiture because its verifier "inadvertently" switched
complainant Part Time Productions, Inc. by "punching the wrong
button."[^71] BDP has offered no evidence to support this claim.[^72]
Nor are we persuaded that our forfeiture should be reduced because 1)
BDP voluntarily went to the Commission to discuss the slamming
complaints and 2) BDP sent consumers a letter offering to transfer them
back to their previous long distance carrier (as part of BDP's
settlement agreement with AT&T).[^73] While good faith may serve as a
mitigating factor, we do not find that BDP's "after-the-fact" efforts
outweigh our substantial evidence of BDP's fraudulent conduct.[^74]

######### IV. CONCLUSION

26 After reviewing the information filed by BDP in its Response, we find
that BDP has failed to identify facts or circumstances to persuade us
that there is any basis for reconsidering the *BDP NAL*. Further, BDP
has not shown any mitigating circumstances sufficient to warrant a
reduction of the \$2,400,000 forfeiture penalty. Finally, we note that
evidence of further violations may lead to institution of a proceeding
to revoke BDP's authorization to be a long distance carrier under
section 214.[^75]

######### V. ORDERING CLAUSES

27 Accordingly, IT IS ORDERED pursuant to Section 503(b) of the Act, 47
U.S.C. § 503(b), and Section 1.80(f)(4) of the Commission\'s rules, 47
C.F.R. § 1.80(f)(4), that Business Discount Plan, Inc. SHALL FORFEIT to
the United States Government the sum of two million four hundred
thousand dollars (\$2,400,000) for violating Sections 201(b) and 258 of
the Act, 47 U.S.C. §§ 201(b), 258, as well as the Commission's rules and
orders in effect from December 1997 to December 1998 governing preferred
interexchange carrier conversions.

28 IT IS FURTHER ORDERED that a copy of this Order of Forfeiture shall
be sent by certified United States mail to Thomas David Jenkins, Owner
and President, Business Discount Plan, Inc., 3780 Kilroy Airport Way,
Suite 200, Long Beach, California, 20806.

FEDERAL COMMUNICATIONS COMMISSION

Magalie Roman Salas

Secretary

**STATEMENT OF COMMISSIONER HAROLD FURCHTGOTT-ROTH\
CONCURRING IN PART, DISSENTING IN PART**

  ----- -------------------------------------------------------------------
  Re:   Order of Forfeiture, In the Matter of Business Discount Plan, Inc.
        Apparent Liability for Forfeiture

  ----- -------------------------------------------------------------------

(rel. July X, 2000).

Although I support today\'s result, I continue to object to the
Commission\'s forays into advertising and marketing regulation. As I
stated previously,[^(1)^](#N_1_) there is no doubt that the Commission
has authority under § 258 to bring enforcement actions against
\"slamming\" carriers. Moreover, I strongly support rigorous and
aggressive enforcement of our slamming rules. In this regard, I believe
today\'s forfeiture amount could be easily justified based solely on the
aggravating factors associated with the carrier\'s Section 258
violations.

However, I continue to believe that Section 201 alone does not provide
an independent basis for punishing carriers based on their marketing
practices. This is a particularly important distinction to make, in
light of the Commission\'s recent decision to venture into the world of
advertising regulation.[^(2)^](#N_2_) The FCC has neither the authority
nor the ability to be the \"marketing police\" of the telecommunications
industry.[^(3)^](#N_3_) Two additional factors also support my
reluctance for the FCC to regulate marketing practices under Section
201: (1) States have the resources and ability to regulate such conduct,
and (2) the Commission and the public are better served by expending the
FCC\'s limited resources on issues more clearly within our statutory
mandate. Thus, I dissent from the portion of today\'s Order that seeks
to punish BDP for its unjust marketing practices on the basis of Section
201.[^(4)^](#N_4_)

As I detailed in my dissenting statement regarding the Joint FTC/FCC
Advertising Guidelines,[^(5)^](#N_5_) Section 201(b) forms a meager
basis for the proposition that the FCC has jurisdiction over
advertising. The majority\'s justification in today\'s Order does little
to relieve my concerns. Indeed, in promulgating the Guidelines, the
majority pointed to only two cases in support of its interpretation of
Section 201. One of those cases was the NAL in this proceeding. The
other case, In re AT&T\'s Card Issuer Identification
Cards,[^(6)^](#N_6_) focused on disclosures associated with calling
cards, and did not find any violation of Section 201. Today\'s decision
invokes those cases as well as a third case, Telecommunications Research
and Action Center and Consumer Action (TRAC). Yet TRAC\'s analysis of
201(b) can best be read as primarily turning on the reasonableness of
the charged rates\--an issue that squarely fits within the FCC\'s
authority. These precedents underscore the fragility of our legal
authority.[^(7)^](#N_7_)

The plain meaning of the term \"practices\" taken in the context of
Section 201 does not clearly reach advertising. Indeed, if \"practices\"
includes advertising, then it is hard to imagine what it does not
include. Furthermore, the legislative history of § 201(b) is silent on
whether the FCC has authority to address these matters. If Congress
wanted the FCC to take on these types of claims, it would have given us
the express authority to do so.[^(8)^](#N_8_) In the face of
congressional silence, this agency should be extremely reluctant to
assume new regulatory responsibilities.

I earlier warned of the potential slippery slope associated with a broad
reading of \"practices\" in 201(b).[^(9)^](#N_9_) Unfortunately today\'s
decision validates that concern by not only punishing Business Discount
Plans based on its marketing, but by further considering the
appropriateness of the use of \"Discount\" in their corporate name. The
Order states that \"BDP\'s company name was just one of many factors we
considered in our section 201(b) analysis.\"[^(10)^](#N_10_) The notion
that this agency will now be policing the legitimacy of business names
shows the dangerous road that a broad reading of Section 201 will take
us down.

Even if our legal authority were more solid, there are sound reasons for
the Commission to refrain from marketing regulation. First, misleading
omissions in advertising, misrepresentation, and consumer fraud claims
are more effectively enforced under the appropriate state consumer
protection laws. State regulatory authorities have the requisite
resources and expertise to protect consumers far better than the
FCC.[^(11)^](#N_11_) Second, the Commission\'s resources are better
spent in resolving issues clearly within our statutory mandate. The
FCC\'s budget is a zero sum game. Resources taken for these activities
must necessarily result in lower funding levels for other initiatives.
Biennial review, universal service funding determinations for high cost
areas and other core tasks should be fully funded before we explore
programs on the edges of, or outside, our statutory mandate.

Justice may have been served in this matter, but the American consumer
does not benefit from our decision today to independently punish BDP for
its marketing practices under Section 201. The majority\'s Section
201-based enforcement action is on the periphery of our statutorily
mandated domain, unnecessarily redundant with state efforts, and an
unfortunate diversion of funds away from more integral activities.

For the foregoing reasons, I respectfully dissent in part.

^1^ See Statement of Commissioner Harold Furchtgott-Roth, Notice of
Apparent Liability for Forfeiture, In the Matter of Business Discount
Plan, Inc. Apparent Liability for Forfeiture, 14 FCC Rcd. 340 (1998).
The NAL raised Section 201 in concert with Section 258 violations.
Subsequent assertions by the Commission of free standing Section 201
authority over advertising have crystallized my opposition to the use of
Section 201 as an independent basis for advertising liability.

^2^ See In re Joint FCC/FTC Policy Statement for the Advertising of
Dial-Around and Other Long Distance Services to Consumers (Publication
page references are not available in Westlaw for this document.) (2000
WL 232230 (F.C.C.) (adopted by the FCC: Feb. 29, 2000) (hereinafter
Advertising Guidelines)

^3^ See Dissenting Statement of Commissioner Harold Furchtgott-Roth In
re Joint FCC/FTC Policy Statement for the Advertising of Dial-Around and
Other Long Distance Services to Consumers (2000 WL 232230 (F.C.C.)
http://www.fcc.gov/Speeches/Furchtgott_Roth/
Statements/2000/sthfr011.html\> (hereinafter Advertising Guidelines
Dissenting Statement).

^4^ See In the Matter of Business Discount Plan, Inc. Apparent Liability
for Forfeiture, Order of Forfeiture, File No. ENF 98-02 (hereinafter
Order) at ¶ 1.

^5^ See Advertising Guidelines Dissenting Statement.

^6^ In re AT&T\'s Card Issuer Identification Cards, Letter, 7 FCC Rcd
7529 (1992).

^7^ I am particularly troubled by the majority\'s invocation of the
Joint FCC/FTC Policy Statement Regarding Advertising Guidelines. ***See
Order at*** ¶ 15**.** This is particularly true based on the
questionable legal foundation of the guidelines. See Weiner v Sprint
Corp, 165 F.R.D. 431 (D.N.J. 1996), appeal dismissed, Civ. No. 96354
(AMW)(May 23, 1996) (holding that there is no duty on carriers under the
Communications Act to make accurate and authentic representations in
their promotional practices); Marcus v. AT&T Corp., 938 F.Supp. 1158
(S.D.N.Y. 1996) (finding that there is no deceptive advertising \[read
marketing\] federal cause of action under the Act); and FTC v. Miller,
549 F.2d 452 (7th Cir. 1997) (stating that the FTC efforts to regulate
advertising may reflect a desirable goal, it is not one Congress appears
to have adopted.) Moreover, because the Advertising Guidelines were a
part of a policy statement and not a product of formal rulemaking, they
should not form the basis of any Enforcement Bureau action.

^8^ Congress has expressly given such regulatory authority to the FTC.
Telephone Disclosure and Dispute Resolution Act Pub. L. 102-556, 106
Stat. 4190, (codified at 15 U.S.C. §§ 5701, 5711-5714, 5721-5724
(1994)).

^9^ See Advertising Guidelines Dissenting Statement.

^10^ See Order at ¶ 18

^11^ In fact, Section 414 Communications Act reads \"\[n\]othing in this
chapter shall in any away abridge or alter the remedies now existing at
common law or by statute, but the provisions of this chapter are in
addition to such remedies.\" See 47 USC § 414 In my view, this \"savings
clause\" preserves the vitality of these state fraud claims In fact, the
majority states that it \"\[w\]elcomes state efforts to deter
slamming.\" See Order at ¶ 15 n. 36. See also Southwestern Bell Mobile
Systems, FCC 99-356 (Nov. 24, 1999). The Commission has declined to
preempt state \"slamming\" regulations in its Rules Concerning
Unauthorized Changes of Consumers\' Long Distance Carriers. See In the
Matter of Policies and Rules Concerning Unauthorized Changes of
Consumers\' Long Distance Carriers. 10 FCC Rcd. 9560 P.43.

[^1]: *Business Discount Plan, Inc.,* Notice of Apparent Liability for
    Forfeiture, 14 FCC Rcd 340 (1998) ("*BDP NAL"*).

[^2]: *See* Common Carrier Scorecard, Federal Communications Commission,
    Jan. 1999 edition, at 14.

[^3]: Section 258 states in pertinent part that "no telecommunications
    carrier shall submit . . . a change in a subscriber's selection of a
    provider of telephone exchange service or telephone toll service
    except in accordance with such verification procedures as the
    Commission shall prescribe." 47 U.S.C. § 258.

[^4]: *See* 47 C.F.R. §§ 64.1100, 64.1150; *Implementation of the
    Subscriber Carrier Selection Changes Provisions of the
    Telecommunications Act of 1996 and Policies and Rules Concerning
    Unauthorized Changes of Consumers\' Long Distance Carriers, First
    Order on Reconsideration,* CC Docket No. 94-129, FCC 00-135 (rel.
    May 3, 2000) (*Section 258 Reconsideration Order*); *Implementation
    of the Subscriber Carrier Selection Changes Provisions of the
    Telecommunications Act of 1996 and Policies and Rules Concerning
    Unauthorized Changes of Consumers\' Long Distance Carriers, Second
    Report and Order and Further Notice of Proposed Rulemaking*, 14 FCC
    Rcd 1508 (1998) (*Section 258 Order*), *stayed in nonrelevant part,
    MCI WorldCom v. FCC*, No. 99-1125 (D.C. Cir. May 18, 1999), *stay
    dissolved,* *MCI WorldCom v. FCC,* No. 99-1125 (D.C. Cir. June 27,
    2000); *Further Notice of Proposed Rulemaking and Memorandum Opinion
    and Order on Reconsideration*, 12 FCC Rcd 10674 (1997); *Policies
    and Rules Concerning Unauthorized Changes of Consumers' Long
    Distance Carriers*, 10 FCC Rcd 9560 (1995) (*LOA Order*), *stayed in
    part*, 11 FCC Rcd 856 (1995) (*In-Bound Stay Order*); *Policies and
    Rules concerning Changing Long Distance Carriers*, 7 FCC Rcd 1038
    (1992) (*PIC Change Order*), *recon. denied*, 8 FCC Rcd 3215 (1993);
    *Investigation of Access and Divestiture-Related Tariffs*, 101 FCC
    Rcd 911 (1985) (*Allocation Order*), *recon. denied*, 102 FCC2d 503
    (1985); *Investigation of Access and Divestiture-Related Tariffs*,
    101 FCC 2d 935 (Com.Car.Bur. 1985) (*Waiver Order*), *recon.
    denied*, 102 FCC 2d 503 (1985).

[^5]: *BDP NAL*, 14 FCC Rcd at 355.

[^6]: Section 201(b) states in pertinent part that "all charges,
    practices, classifications, and regulations for and in connection
    with communication service shall be just and reasonable . . . ." 47
    U.S.C. § 201(b).

[^7]: *BDP NAL*, 14 FCC Rcd at 362. The Commission has authority
    pursuant to section 503(b) of the Act, 47 U.S.C. § 503(b), to assess
    a forfeiture penalty against a common carrier if the Commission
    determines that the carrier has "willfully or repeatedly" failed to
    comply with the provisions of the Act or with any rule, regulation,
    or order issued by the Commission.

[^8]: BDP Response to the NAL ("Response") at 38.

[^9]: *Id.* (citing section 258(a), 47 U.S.C. § 258(a), which provides
    that "no telecommunications carrier shall submit or execute a change
    in a subscriber's selection of a provider of telephone exchange
    service . . . except in accordance with such verification procedures
    as the Commission shall prescribe.")

[^10]: *Id.*

[^11]: *See supra* footnote 4. Specifically, the Commission's rules and
    orders required that interexchange carriers either obtain a signed
    letter of agency from the consumer, or, in the case of telemarketing
    solicitations, complete one of four telemarketing verification
    procedures before submitting preferred carrier change requests to
    local exchange carriers on behalf of consumers. The four
    alternatives are: (1) obtain a letter of agency from the subscriber;
    (2) receive confirmation from the subscriber via a toll-free number
    provided exclusively for the purpose of confirming change orders
    electronically; (3) use an independent third party to verify the
    subscriber's order; or, (4) send an information package that
    includes a postpaid postcard which the subscriber can use to deny,
    cancel, or confirm a service order, and wait 14 days after mailing
    the packet before submitting the PIC change order. *See* 47 C.F.R.
    §§ 64.1100, 64.1150; *PIC Change Order*, 7 FCC Rcd at 1039.

[^12]: *See BDP NAL*, 14 FCC Rcd at 341.

[^13]: *See* Joint Explanatory Statement of Managers, S. Conf. Rep. No.
    104-230, 104^th^ Cong., 2d Sess. Preamble (1996) at 1 (*Joint
    Explanatory Statement*). The Act does not define slamming, but the
    *Joint Explanatory Statement* states that the conference agreement
    adopted the House provision, which refers to slamming as "illegal
    changes in subscriber selections." *Joint Explanatory Statement* at
    136. Prior to the Act, the Commission defined slamming as the
    unauthorized conversion of a consumer's interexchange carrier by
    another interexchange carrier, an interexchange resale carrier, or a
    subcontractor telemarketer. *Cherry Communications, Inc.,* Consent
    Decree, 9 FCC Rcd 2086, 2087 (1994).

[^14]: The Act defines "telecommunications carrier" in pertinent part as
    "any provider of telecommunications services, except that such term
    does not include aggregators of telecommunications services (as
    defined in section 226)." 47 U.S.C. § 153(44).

[^15]: Thus, Congress declared it illegal for both local exchange and
    long distance carriers to submit or execute a change in a
    subscriber's selection of a provider of telephone exchange service
    or telephone toll service "except in accordance with such
    verification procedures as the Commission shall prescribe." *See* 47
    U.S.C. § 258(a).

[^16]: *Id.* at 1514.

[^17]: In addition to these new verification rules, the *Section 258
    Order* adopted liability rules designed to take the profit out of
    slamming. *Section 258 Order*, 14 FCC Rcd at 1512. These liability
    rules were stayed by the United States Court of Appeals for the
    District of Columbia Circuit at the request of MCI WorldCom, Inc.,
    but that stay was dissolved on June 27, 2000. *MCI WorldCom, Inc. v.
    FCC*, No. 99-1125 (D.C. Cir., June 27, 2000). In our *Section 258
    Reconsideration Order*, we amended certain of our liability rules,
    granting in part petitions for reconsideration of the *Section 258
    Order*. *See* *Section 258 Reconsideration Order*, CC Docket No.
    94-129, FCC 00-135 (rel. May 3, 2000).

[^18]: *See supra* paragraph 7. As the Commission noted when it sought
    comment on rules to implement section 258, the issue before us was
    whether "*existing safeguards* against slamming *were adequate* in a
    marketplace in which carriers can compete for local as well as long
    distance service customers, and where there may no longer be an
    independent third party executing changes in subscribers'
    telecommunications carriers." *See* *Further Notice of Proposed
    Rulemaking and Memorandum Opinion and Order on Reconsideration*, 12
    FCC Rcd 10674, 10680 (1997) (Emphasis added).

[^19]: Moreover, Congress was presumptively aware of the Commission's
    existing rules and orders concerning preferred carrier change
    procedures at the time it enacted section 258. The evaluation of
    congressional action must take into account its "contemporary legal
    context," which, in this case, includes the Commission's existing
    PIC change rules and orders. *See* *Cottage Sav. Ass'n v. C.I.R.*,
    499 U.S. 554, 561 111 S.Ct. 1503, 1508 (1991); *Cannon v. University
    of Chicago*, 441 U.S. 677, 698-699, 99 S.Ct. 1946, 1958-1959 (1979).

[^20]: *See, e.g.,* *Brittan Communications International, Inc.*, Order
    of Forfeiture, 15 FCC Rcd 4852 (2000) (*Brittan Forfeiture Order*);
    *Long Distance Direct, Inc.,* Memorandum Opinion and Order, 15 FCC
    Rcd 3297 (2000) (*Long Distance Direct Forfeiture Order*).

[^21]: *See Brittan Forfeiture Order*, 15 FCC Rcd at 4852; *Long
    Distance Direct Forfeiture Order,* 15 FCC Rcd at 3297.

[^22]: *See* 47 U.S.C. § 258(a).

[^23]: Indeed, the record reflects that BDP not only failed to follow
    any of the Commission-prescribed verification procedures, but also
    failed to first obtain the complainants' authorization. *See BDP
    NAL*, 14 FCC Rcd at 341. As described in the *BDP NAL*, BDP's
    telemarketers repeatedly misrepresented the nature of BDP's service
    offering or in other ways engaged in practices designed to prevent
    consumers from understanding that BDP sought to change their
    preferred carriers. *See id.*

[^24]: 47 U.S.C. § 258 (Emphasis added).

[^25]: *See, e.g.,* *LaFontant v. I.N.S.*, 135 F.3d 158, 160 (D.C. Cir.
    1998).

[^26]: *See supra* paragraph 8.

[^27]: Response at 39 (citing 47 C.F.R. § 64.1100).

[^28]: *Id.* at 40.

[^29]: *Id.* at 9-11.

[^30]: *Id.* at 41.

[^31]: *Id.* at 7-9, 43-44.

[^32]: *Id.* at 45. BDP sent this letter pursuant to the terms of a 1998
    settlement agreement with AT&T, who had sued BDP on the grounds that
    its telemarketers misrepresented that they were affiliated with
    AT&T. See *BDP NAL*, 14 FCC Rcd at 354 n.63.

[^33]: *See, e.g.,* Response at 12.

[^34]: We find it disingenuous of BDP to suggest that its telemarketers'
    frequent references to AT&T's service were solely to satisfy the
    Commission's policy of encouraging resellers to advise consumers of
    the identity of underlying carriers. *See* Response at 28. Taken in
    the context of BDP's telemarketing calls, it is apparent that BDP
    wanted consumers to believe that they were dealing with AT&T or one
    of its affiliates.

[^35]: Indeed, the exhibits to BDP's Response belie its claim that
    consumers were meaningfully apprised of a change in long distance
    carriers. For example, in the verification transcript associated
    with the R&S Complaint, BDP's verifier begins the call as follows:
    "The reason we are speaking is to confirm the details you discussed
    regarding your Centel West billing to Business Discount Plan *one
    bill service*. Your name is ... and *you can approve this*? . .
    .\[Verifier then checks business name and address\] . . . With your
    permission, if there are any other business numbers at your
    location, they will be included in the *simplified billing format*
    for you also . . . ." Response at 10. (Emphasis added.) Thus, the
    R&S transcript shows that the complainant approved a "one bill
    service," not a change in carriers.

[^36]: Further, as we noted in our NAL, some of BDP's verifiers spoke
    extremely quickly, thus further confusing consumers. *See BDP NAL*,
    14 FCC Rcd at 346.

[^37]: *See, e.g.,* *BDP NAL*, 14 FCC Rcd at 353 n.62; *see also BDP
    NAL*, File No. ENF 98-02.

[^38]: *See* Response at 43-45.

[^39]: *See* 47 U.S.C. § 217; *see also Amer-I-Net Services
    Corporation,* Order of Forfeiture, 15 FCC Rcd 3118 (2000) (citing
    numerous instances in which the Commission has stated that carriers
    are responsible for the acts of their marketing agents).

[^40]: Response at 20.

[^41]: 47 U.S.C. § 201(b).

[^42]: As a general matter, the Commission welcomes state efforts to
    deter slamming. *See Section 258 Reconsideration Order*, CC Docket
    No. 94-129, FCC 00-135, paras. 22-42 (rel. May 3, 2000); *Policies
    and Rules Concerning Unauthorized Changes of Consumer's Long
    Distance Carriers*, 10 FCC Rcd 9560, 9583 (1995).

[^43]: *See AT&T,* 71 RR2d 775 (1992).

[^44]: *See Telecommunications Research and Action Center and Consumer
    Action v. Central Corp. et al.,* 4 FCC Rcd 2157 (Com.Car. Bur.
    1989).

[^45]: We recently expressly relied on our section 201(b) authority in
    issuing a Joint Policy Statement with the Federal Trade Commission
    concerning the advertising of "dial-around" and other long distance
    services to consumers. *See* Joint FCC/FTC Policy Statement For the
    Advertising of Dial-Around And Other Long Distance Services To
    Consumers, *Policy Statement*, FCC 00-72 (Mar. 1, 2000).

[^46]: Response at 25.

[^47]: *See supra* paragraph 2.

[^48]: Response at 26.

[^49]: *Id.* at 26-27.

[^50]: *See BDP NAL*, 14 FCC Rcd at 357-358, 353 n.61.

[^51]: Response at 31-33.

[^52]: *See* *id.* at 34-37.

[^53]: *See, e.g., Vista Group International, Inc.,* Notice of Apparent
    Liability for Forfeiture, 14 FCC Rcd 13814, 13824 (1999) (*Vista
    NAL*); *CCN, Inc.*, 13 FCC Rcd 13599, 13600 (1998) (*CCN Revocation
    Order).*

[^54]: Response at 11-13.

[^55]: *Id.* at 37.

[^56]: Response at 45-47. According to BDP, the proposed forfeiture
    constitutes a civil penalty that is "punitive in nature," and
    therefore, subject to the Excessive Fines Clause of the Eighth
    Amendment to the U.S. Constitution. *Id.* at 47.

[^57]: *Id.* at 48-49 (citing *Commission's Forfeiture Policy Statement
    and Amendment of Section 1.80 of the Rules to Incorporate the
    Forfeiture Guidelines,* Report and Order, 12 FCC Rcd 17087 (1997),
    *recon. denied,* 15 FCC Rcd 303 (1999) (*Forfeiture Policy
    Statement*)).

[^58]: *See* 47 U.S.C. § 503(b)(2)(D); *see also Forfeiture Policy
    Statement*, 12 FCC Rcd at 17099.

[^59]: These criteria include the egregiousness of the misconduct,
    ability or inability to pay, whether the violation was an
    intentional violation, whether substantial harm resulted from the
    violations, history of compliance with Commission requirements,
    whether the violator realized substantial economic gain from the
    misconduct, and whether the violation is repeated or continuous.
    *See Forfeiture Policy Statement*, 12 FCC Rcd at 17099.

[^60]: *See, e.g.,* *All American Telephone Company, Inc.,* Notice of
    Apparent Liability for Forfeiture, 13 FCC Rcd 15040, 15041 (1998);
    *Brittan Forfeiture Order,* 15 FCC Rcd at 4854; *Amer-I-Net Services
    Corp.,* Order of Forfeiture, 15 FCC Rcd 3118 (2000). Subsequent to
    the release of the *BDP* NAL, the Commission applied the "upward
    adjustment criteria" in the forfeiture guidelines to find Vista
    Group International, Inc. apparently liable for \$80,000 for each
    unauthorized conversion that was compounded by evidence that the
    carrier engaged in unjust and unreasonable telemarketing practices.
    *See Vista NAL*, 14 FCC Rcd at 13829.

[^61]: *See Forfeiture Policy Statement*, 12 FCC Rcd at 17099.

[^62]: *BDP NAL*, 14 FCC Rcd at 362.

[^63]: *Id.*

[^64]: *See* Response at 48-49.

[^65]: Indeed, although BDP's deceptive marketing practices were closely
    related to its slamming conduct, the two violations are separate and
    distinct. BDP could have slammed the complainants without
    misrepresenting the nature of its service offering, and it could
    have misrepresented its service offering without slamming the
    complainants. The fact that it did both militates strongly in favor
    of assessing an overall forfeiture amount greater than the standard
    amount for slamming.

[^66]: *See* Response at 48.

[^67]: Response at 50.

[^68]: *See, e.g.,* *Brittan Forfeiture Order*, 15 FCC Rcd at 4854
    (noting that the Commission seeks "to deter companies from engaging
    in the illegal act of slamming and will employ the necessary
    forfeiture penalties to encourage compliance with Commission rules
    and orders"); *Nationwide Long Distance, Inc.,* Notice of Apparent
    Liability, 11 FCC Rcd 3087 (1996).

[^69]: 47 U.S.C. § 503(b)(6)(B).

[^70]: *See* Letter from Greg L. Eriksen, Counsel for BDP, to Kathie A.
    Kneff, Informal Complaints and Public Inquiries Branch, Enforcement
    Division, Common Carrier Bureau (Aug. 7, 1998).

[^71]: Response at 40.

[^72]: *See* Response & Exhibits A -- H.

[^73]: Response at 50 n.15.

[^74]: We note that on May 17, 2000, the Connecticut Department of
    Public Utility Control ("DPUC") determined that BDP had engaged in
    slamming and imposed a fine of \$50,000 on the company. The DPUC
    found, among other things, that BDP had deceived customers by
    representing or implying that they would remain with their existing
    long distance service providers after choosing BDP's bill
    consolidation service. *See In re.* *Application of the Attorney
    General to Revoke or Suspend Business Discount Plan, Inc.'s
    Certificate of Public Convenience and Necessity*, Docket No.
    98-11-16 (May 17, 2000).

[^75]: *See CCN Revocation Order*, 13 FCC Rcd at 13599 (revoking the
    Fletcher Companies' section 214 operating authority for slamming and
    other violations of the Act and Commission rules).