The significant increase in the unauthorized change of a consumer's telephone service provider, a practice known as slamming, has prompted regulators, Members of Congress, and industry representatives to examine ways to protect consumers against this growing problem. The 105 th Congress held several hearings and introduced many bills to address this issue, but adjourned without passing legislation. Two measures to further strengthen slamming regulations, S. 58 , and S. 1084 , were introduced in the 106 th Congress, but neither was enacted. No legislation addressing slamming was introduced in either the 107 th or 108 th Congress and none has been introduced in the 109 th Congress, to date. Federal activity now rests with the FCC, as it attempts to enforce its rules to deter slamming. The FCC continues to take actions to enforce and further strengthen its slamming rules. The last of these new rules went into effect on November 28, 2000. Under these revised rules, states have the option of processing slamming complaints, and numerous states have opted to do so. On March 14, 2002, the FCC initiated a notice of proposed rulemaking to examine primary interexchange (long distance) carrier (PIC) change charges, and in a February 10, 2005 action modified the rate structure that was set in 1984. A second further notice of proposed rulemaking, issued on March 17, 2003, imposing additional requirements on third-party verification services became effective on July 21, 2003. The effectiveness of the new rules and their implementation is receiving continuing attention from Members of Congress, regulators, providers, and consumers. Since the development of competition in the provision of long distance telecommunications services, consumers have been able to select the carrier of their choice from among approximately 500 companies. However, a number of consumers have that choice taken away from them when their designated telephone service provider is changed without their knowledge or consent. This unauthorized change can occur for several reasons, ranging from computer or human error to unscrupulous or illegal marketing practices. Regardless of the reason, this unauthorized switching, known as "slamming," has a negative impact on both the consumers and suppliers of telecommunications services. Consumers not only lose the right to subscribe to their carrier of choice; they may also be subject to lower quality of service, higher rates, or lose special features or premiums offered by their designated carrier. Consumers often do not realize they have been slammed until they find unfamiliar names or charges on their telephone bills. For some who do not examine their bills, such changes can go undetected for months or even longer. Telecommunications carriers are also harmed by slamming, as this practice distorts the marketplace by increasing the customer base and revenues of the carrier that has illegally switched the consumer at the expense of the legitimately chosen carrier. Despite existing regulations to prevent such practices and the overall condemnation of such activities, slamming continues to occur with significant frequency. According to data released by the Federal Communications Commission (FCC), slamming continues to be a major consumer concern, with 36,220 inquiries and 1,932 complaints filed in 2005. The FCC's slamming team, which is part of the Consumer and Governmental Affairs Bureau, in 2004 resolved approximately 3,500 slamming complaints involving over 300 telephone carriers, resulting in consumer refunds totaling $800,000. Since many consumers who are the victims of slamming may not file complaints, and over 50 million carrier selection changes are recorded each year, it is assumed that filed complaints represent a subset of the actual problem. The potential for slamming is expected to increase as competition in the provision of intrastate long distance and local telecommunications services becomes more widespread. A significant level of consumer complaints, coupled with the potential for further abuses in an increasingly competitive marketplace, has prompted action to examine and strengthen deterrents to this practice. How to prevent slamming is being addressed on several fronts. The FCC has revised its rules with an eye to strengthening its regulations and increasing penalties for violators. The 105 th Congress while actively examining this issue, adjourned without passage of legislation. Similarly two measures ( S. 58 , S. 1084 ) introduced in the 106 th Congress were not enacted. No legislation addressing slamming was introduced in the 107 th or 108 th Congresses and none has been introduced in the 109 th Congress, to date. The industry is attempting to self-regulate and has put forth proposals to stop this activity. (State regulatory bodies and legislatures, and law enforcement officials, are also taking actions to stop this practice. However, a review of state-level activities regarding slamming is beyond the scope of this report.) The FCC currently has policies and rules to protect consumers from the unauthorized switching of their long distance carriers, and it enforces them through the investigation of individual complaints. The FCC adopted its rules in response to the numerous complaints it received from state regulatory bodies, telecommunications carriers, and individual consumers. FCC rules currently require a long distance company to obtain a subscriber's authorization before a switch can occur. Authorization can be obtained in writing or can be confirmed orally. Specific requirements relating to what must be contained in written and oral authorizations are enumerated in the regulations. Furthermore, FCC rules protect consumers from paying potentially exorbitant rates. If a subscriber has been a victim of an unauthorized change, he/she is absolved of payment for up to 30 days; refunds of charges are set at 150 percent, split between the authorized carrier (100%) and the subscriber (50%). Carriers proven to be in violation of FCC rules are subject to fines and penalties. From April 1994 to the end of 1999, the FCC imposed final forfeitures against 8 companies for $10.3 million, entered into consent decrees with 12 carriers with combined payments of $2.7 million and proposed $7.6 million in proposed notices of apparent liability against 5 companies. The FCC continues to take enforcement actions against violators. According to the FCC in the past decade its Enforcement Bureau has taken slamming enforcement actions totaling nearly $30 million. FCC action in 2004 by the Consumer and Governmental Affairs Bureau, on behalf of individual consumers, resolved about 3500 slamming complaints involving more than 300 carriers resulting in $800,000 in consumer refunds. In its first joint federal/state effort, the FCC, working with 14 state agencies, filed on June 20, 2002, a $1.2 million fine against WebNet Communications Inc. of McLean, Va., for 20 alleged violations. In an April 21, 1998 action, the FCC levied its most severe penalty for slamming to date. For the first time, it revoked the operating authority of a telecommunications provider for slamming violations and levied a multi-million dollar fine. This action was taken against the Fletcher Companies, a group of long distance telephone companies, for engaging in slamming and numerous other violations of the Communications Act and FCC rules. These companies, and their principals, are barred from providing interstate telecommunications services without the prior consent of the FCC. Furthermore, the FCC assessed forfeitures totaling $5.7 million but has never been able to collect. According to the FCC, it received more than 1,400 complaints against the Fletcher Companies, the majority of them filed from mid-1996 through 1997. Although these companies stopped providing services in 1997, during the FCC's investigation, this action was taken, according to the FCC, to ensure that none of these companies can resume operation and "engage in slamming or other conduct ... harmful to consumers." Provisions contained in the Telecommunications Act of 1996 (see discussion below) expand the scope of the FCC's authority to address the problem of unauthorized switches. The FCC, in a December 17, 1998 order and subsequent reconsiderations, expanded upon and adopted more stringent rules to combat slamming. The Telecommunications Act of 1996, which was signed into law on February 8, 1996 ( P.L. 104-104 ), resulted in a major rewrite of the 1934 Communications Act (47 U.S.C. 151 et.seq.). Section 258 of the Telecommunications Act of 1996, which became Section 258 of the 1934 Communications Act, as amended, expands jurisdiction over, and creates a new penalty for, any telecommunications carrier that illegally changes a subscriber's designated telecommunications carrier. Section 258(a) prohibited telecommunications carriers from changing a subscriber's selection of both telephone exchange (local) and toll (long distance) service, unless the change complies with verification procedures prescribed by the FCC. The section expanded the FCC's authority over such activity to include local as well as long distance service. State utility commissions are also permitted to enforce the procedures with respect to services within their state boundaries. Section 258(b) created a new penalty, in addition to already existing penalties contained in law, for those who violate FCC verification procedures. Any telecommunications carrier that violates those procedures and collects charges for such service is required to pay the subscriber's properly designated carrier all the charges collected from that subscriber since the change occurred. The requirement prevents violators from receiving financial rewards for the illegal switch. The FCC, in a December 17, 1998 action (CC Docket No. 94-129), adopted new regulations in compliance with the 1996 Act. These rules, with the exception of the liability provisions, went into effect in April 1999. The liability provisions were stayed by the D.C. Court of Appeals. On May 3, 2000 the FCC issued revised slamming liability rules which met court approval and the stay was lifted on June 27, 2000. These revised liability rules have since been implemented, taking effect on November 28, 2000. The major provisions of these rules focus on three areas: consumer liability; verification methods; and consumer assistance. The rules absolve slammed consumers of liability for charges incurred for the first 30-day period after an unauthorized switch. In cases where payment was made by the consumer, the unauthorized carrier must refund 150% of the charges to the authorized carrier. The authorized carrier is allowed to keep an amount equal to 100 percent of the consumer's bill with the remaining 50% returned to the consumer.