Overview and Policy Objectives
On June 7, 2018, the Federal Communications Commission adopted a Report and Order in CG Docket No. 17-169 (FCC 18-78, released June 8, 2018) aimed at eliminating deceptive practices in telecommunications carrier changes and billing. The Commission amended Part 64 of its rules to establish bright-line prohibitions against slamming—the unauthorized switching of a subscriber's voice provider—and cramming—the placement of unauthorized charges on subscriber telephone bills.
Exercising authority under Sections 201(b) and 258 of the Communications Act of 1934, as amended, the FCC acted to formalize protections that had previously been enforced primarily on a case-by-case basis. While prior enforcement actions and market shifts toward all-distance calling reduced complaint volumes in recent years, the Commission determined that formal codification provides necessary certainty to industry participants and reinforces consumer safeguards, particularly for vulnerable populations such as the elderly and non-English speakers.
- Adopted Date: June 7, 2018; Released Date: June 8, 2018
- Docket: CG Docket No. 17-169
- Commission Document Number: FCC 18-78
- Statutory Authority: 47 U.S.C. §§ 151-154, 201(b), and 258
Prohibition of Material Misrepresentations on Sales Calls
Under newly added 47 CFR § 64.1120(a)(1)(i)(A), the Commission prohibited telecommunications carriers from making material misrepresentations, including material omissions, during sales calls. A 'sales call' is defined as any telephone call in which a carrier encourages a subscriber to submit or execute a change in their provider of telephone exchange service or telephone toll service.
The Commission established that any finding of material misrepresentation during a sales call invalidates a subscriber's subsequent authorization to change carriers, even if the carrier possesses a facially compliant third-party verification (TPV) recording. Additionally, the rule specifies that when a consumer provides a credible allegation of a sales call misrepresentation, the burden of proof shifts to the calling carrier to proffer persuasive evidence to rebut the claim.
- Material misrepresentations invalidate carrier switch authorizations regardless of subsequent verification records.
- Credible consumer allegations shift the evidentiary burden of proof to the submitting carrier.
- Sales call recording is encouraged but not mandated due to industry-wide compliance costs.
Codification of Cramming Ban in Truth-in-Billing Rules
The Commission codified an explicit ban on cramming by adding paragraph (g) to Section 64.2401 of its Truth-in-Billing rules (47 CFR § 64.2401(g)). The provision mandates that carriers shall not place, or cause to be placed, unauthorized charges on any telephone bill.
The prohibition on unauthorized billing applies broadly across both wireline telecommunications carriers and Commercial Mobile Radio Service (CMRS) wireless providers. The FCC rejected requests to exempt wireless providers, finding that mobile subscribers require the same explicit regulatory protections against unauthorized third-party charges as wireline users.
- Applies to both wireline and wireless (CMRS) telephone billing.
- Directly establishes unauthorized billing charges as a regulatory violation of Part 64.
- Operates alongside statutory enforcement remedies available under Section 201(b).
Third-Party Verification (TPV) Process Reforms and Penalties
The Report and Order enacted targeted modifications to the third-party verification framework under 47 CFR § 64.1120. To streamline operations and eliminate outdated regulatory classifications, the Commission removed Section 64.1120(b)'s requirement that carriers obtain separate authorizations for each individual service sold (such as intraLATA versus interLATA toll services) when switching multiple telecommunications services.
To deter fraud, revised Section 64.1120(b) establishes that any carrier subject to an FCC forfeiture order for abusing the TPV process—such as manipulating or forging verification audio—will be suspended from using TPV to verify carrier changes for five years. Suspended carriers must rely on alternative authorized methods, such as written Letters of Agency (LOAs), to confirm subscriber switches.
- Eliminated separate authorization requirements for individual service categories like intraLATA and interLATA toll.
- Instituted a mandatory five-year suspension from using TPV for any carrier found liable in a forfeiture order for TPV abuse.
- Maintained statutory forfeiture penalties of up to $196,387 per violation and potential Section 214 license revocations for egregious misconduct.
Proposals Declined by the Commission
Evaluating the administrative record, the FCC declined to adopt several broader preventative mandates that commenters argued would unnecessarily burden legitimate carrier operations, slow down consumer-initiated switches, and increase switching costs.
The Commission decided against mandating default carrier freezes (PIC freezes), requiring executing carriers to double-check switch requests, mandating recording of all sales calls across the industry, establishing default blocks on third-party charges, or eliminating the TPV framework entirely.
- Declined mandatory default Presubscribed Interexchange Carrier (PIC) freezes.
- Declined mandatory universal sales call recording requirements.
- Declined default blocks on third-party local and long-distance charges.
- Retained the TPV mechanism while adding targeted deterrents against fraud.