DOJ Sues for Unpaid $4.5M Fine Against Long Distance Firm Cited for Slamming

The DOJ filed a Communications Act complaint (docket 2:23-cv-00160) Monday on behalf of the FCC against U.S. Telecom Long Distance to enforce a forfeiture order it released in September 2016 assessing a $4.48 million penalty against the company for “improperly changing” consumers’ long distance carriers in a “slamming” scheme. The complaint was filed in U.S. District Court for Nevada in Las Vegas. USTLD is a non-facilities-based interexchange carrier authorized to provide service in 47 states.

It was the second DOJ complaint filed Monday against long-distance telecom companies for improperly changing the preferred long distance carriers of consumers and for charging consumers directly, or through their local telephone companies, for long distance service that they had never authorized. DOJ also filed a suit in U.S. District Court for Colorado in Denver against Central Telecom for “slamming, cramming, and unclear and insufficiently specific billing practices” (see 2301300060).

The FCC Enforcement Bureau reviewed over 60 consumer complaints against USTLD filed with the FCC, FTC, various state agencies and the Better Business Bureau, with many saying company telemarketers “misrepresented” that USTLD was, or was affiliated with, the customer’s existing long-distance carrier. Telemarketers told customers the purpose of the call was to obtain authorization to change customers’ current service plan with their existing carrier but not to actually switch carriers, the complaint said.

After receiving authorization, the company attempted to switch consumers’ long-distance carrier to USTLD and charged consumers for services by billing them directly or by placing charges on their phone bills from their local exchange carriers. The FCC released a notice of apparent liability for forfeiture (NAL) to USTLD in the amount of $5.2 million for “apparent willful and repeated violations" of 47 U.S.C. sections 201(b) and 258, and 47 C.F.R. sections 64.1120 and 64.2401(b).

USTLD filed a written response to the NAL in March 2014, said the complaint. In September, the FCC released a forfeiture order saying USTLD changed the preferred carriers of three consumers without authorization, assessed unauthorized charges on 33 occasions and made misrepresentations in eight slamming and cramming instances. It also said the defendant violated truth-in-billing rules in 10 instances by not providing a clear description of services rendered.

The forfeiture order concluded USTLD failed to refute the evidence cited in the NAL and the company violated sections 201(b) and 258 of the U.S.C. and sections 64.1120 and 64.2401 of the C.F.R. on third-party verification of changes to a consumer’s preferred provider of telecommunications services. The order reduced the penalty to $4.48 million. If USTLD didn’t pay the forfeiture within 30 days, the matter could be referred to the DOJ for enforcement; it hasn't paid the forfeiture. The FCC seeks payment of $4.48 million, interest and costs incurred by legal action.