WASHINGTON (AP) â€” WorldCom has agreed to pay $3.5 million to settle charges that it illegally switched customers' telephone carriers. It is the largest such payment ever collected by the Federal Communications Commission.
The settlement with the nation's second largest long-distance carrier resolves an inquiry by the commission into consumer complaints about the practice known as ``slamming'' â€” changing customer's carriers without their permission.
``This action puts the entire industry on notice that consumers should not be hoodwinked over the phone,'' said FCC Chairman William Kennard.
Under the consent decree, consumers who claim they were slammed will be reimbursed for the cost of switching back to their original carrier. They also will be paid for the difference between WorldCom's rates and that of their original carrier for the period in which they allege their service was changed illegally, commission officials said.
If WorldCom determines that the consumer was indeed slammed, it will provide a refund for all calling charges.
FCC officials said the agency received 2,900 slamming complaints from consumers about WorldCom last year. Most of the calls concerned telemarketing. For example, some consumers said they did not recognize the voice of the people who allegedly had approved the switch in their long-distance carrier. A third-party verifier typically keeps a tape to confirm that such a change has been authorized.
Bernard J. Ebbers, WorldCom's chief executive officer and president, said the incidents highlighted by the FCC were perpetrated by a few sales employees who were fired.
``Our zero tolerance policy for slamming is very real, and we will take whatever steps necessary to prevent slamming from occurring,'' Ebbers said.
WorldCom, formerly MCI WorldCom, also has agreed to bolster its consumer protection practices. It recently created a 200-member team to focus on customer service.
Under the settlement, the company will:
â€”Establish a mandatory code of conduct for all phone sales representatives with a disciplinary system for violations.
â€”Create performance incentives to reward sales representatives based on the quality of their sales and to impose financial penalties for inappropriate sales conduct.
â€”Immediately fire any sales representatives who intentionally deceive a customer.
â€”Apply additional audits to the third-party verification system, used to ensure customers have authorized a change in their service.
New commission rules, adopted two years ago, give customers broader remedies for slamming, including a 30-day period in which they can avoid paying long-distance charges to allow time to resolve the problem.
But the U.S. Court of Appeals for the District of Columbia indefinitely halted enforcement of the rules last year at the request of WorldCom. The commission filed a brief asking the court to lift its stay on May 18. WorldCom officials now say they don't oppose the FCC's seeking to have the rules reinstated.
If the court allows the rules to be enforced, they would then govern the settlement with WorldCom.
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