******************************************************** NOTICE ******************************************************** This document was converted from WordPerfect to ASCII Text format. Content from the original version of the document such as headers, footers, footnotes, endnotes, graphics, and page numbers will not show up in this text version. All text attributes such as bold, italic, underlining, etc. from the original document will not show up in this text version. Features of the original document layout such as columns, tables, line and letter spacing, pagination, and margins will not be preserved in the text version. If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** 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 ) NOTICE OF APPARENT LIABILITY FOR FORFEITURE Adopted: December 16, 1998 Released: December 17, 1998 By the Commission: Commissioner Furchtgott-Roth issuing a separate statement. I. INTRODUCTION 1. By this Notice of Apparent Liability for Forfeiture (NAL), we initiate enforcement action against Business Discount Plan, Inc. (BDP), a reseller of long distance telephone service. For the reasons set forth below, we find that BDP, in seeking to change the long-distance service providers of the thirty small business customers discussed herein, apparently willfully or repeatedly violated section 201(b) of the Communications Act of 1934, as amended (the Act), by employing unjust and unreasonable telemarketing practices, such as misrepresenting the nature of BDP's service offering. In addition, we find that BDP apparently willfully or repeatedly violated section 258 of the Act, as well as Commission rules and orders, by converting the preferred interexchange carriers (PICs) of these thirty small business customers without their authorization. 2. BDP, formerly known as Trans National Telephone, Inc., is a privately-held company headquartered in Long Beach, California. The sole owner of BDP, Thomas David Jenkins, also serves as the company's president. Mr. Jenkins formerly owned the "Main Warehouse," a California-based company that sold office products through telemarketing. In July of 1989, the U.S. Postal Inspection Service terminated the operations of the Main Warehouse after receiving numerous consumer complaints of misrepresentation and fraud. 3. The consumer complaints that support the instant NAL follow a similar pattern. As described below, it appears that BDP, which solicited small business customers through telemarketing, misrepresented or implied that it was affiliated with customers' preferred interexchange carriers (in most cases, AT&T), or with customers' local exchange carriers. BDP then misrepresented its service as a generic "business discount plan" that would consolidate the customers' local and long-distance telephone charges on one bill for the customers' convenience. When customers agreed to a bill consolidation, BDP failed to consolidate on one bill the charges from customers' local exchange carriers and preferred interexchange carriers. Rather, BDP apparently switched customers' preferred interexchange carriers to BDP without their authorization. Further, despite the name "Business Discount Plan," BDP did not charge discounted rates for its long-distance service. Indeed, BDP's rates are approximately 20 percent above AT&T's rates for basic business services. 4. Based upon our review of the facts and circumstances surrounding these egregious violations, we find that BDP is apparently liable for a total forfeiture amount of $2,400,000 for violations of both sections 201(b) and 258 of the Act. In particular, we find that BDP is apparently liable for a forfeiture in the amount of $40,000 for each instance in which it employed unjust and unreasonable telemarketing practices with respect to each of the thirty small business customers. In addition, we find BDP apparently liable in the amount of $40,000 for each of the unauthorized conversions of the thirty complainants' preferred interexchange carriers. 5. As an additional measure, we require BDP to file with this Commission within thirty days of the date of this NAL, a compliance plan detailing the actions it has taken and the procedures it has established to ensure compliance with sections 201(b) and 258 of the Act and this Commission's rules and orders relating to PIC changes. The compliance plan shall set forth procedures designed to enable BDP promptly to identify and address consumer inquiries and concerns about its PIC-change practices. We note that we are continuing to review complaints filed against BDP and that the Commission may assess additional forfeitures or take other enforcement action if appropriate. II. THE CONSUMER COMPLAINTS A. Background 6. Our action is based on a joint investigation conducted by the Common Carrier Bureau and the Compliance and Information Bureau concerning thirty consumer complaints, filed with the Commission between December 1997 and June 1998, all of which allege that BDP fraudulently converted the complainants' preferred interexchange carriers without their authorization. As set forth in the consumer complaints described below, BDP apparently employed certain misleading and deceptive telemarketing practices that resulted in these unauthorized PIC changes. According to the complainants, these fraudulent practices occurred during two "phases" of BDP's telemarketing process. First, BDP's telemarketing representatives conducted initial sales calls during which they solicited complainants to change their long-distance service providers. Subsequently, "third-party verifiers" employed by BDP contacted the complainants to confirm that they had authorized a switch to BDP's long-distance service. 7. Upon receipt of the consumer complaints, the Common Carrier Bureau's Consumer Protection Branch forwarded the complaints to BDP along with Notices of Informal Complaint (Notices) in accordance with the Commission's rules. BDP generally responded with brief letters containing minimal information and "boilerplate" language stating that the complainant's long-distance service was switched to BDP "pursuant to a telemarketing order that was verified by an independent third party pursuant to 47 C.F.R.  64.1100(c)." BDP's letters typically noted the amount of money BDP had credited to a complainant's account in an apparent attempt to resolve the complaint and terminate proceedings at the Commission. 8. On August 11, 1998, counsel for BDP met with representatives of the Common Carrier Bureau to discuss the consumer complaints that had been filed against BDP. During the meeting, counsel for BDP represented that although it was not the company's practice to tape record the initial sales calls made by BDP's telemarketers, all of the verification calls were recorded on audiotape. According to BDP's attorney, these audiotapes are categorized to facilitate prompt retrieval in the event a customer asks to hear a recording of his or her conversation with BDP's third-party verifier. 9. On August 12, 1998, the Consumer Protection Branch issued to BDP "Second Notices of Informal Complaint" (Second Notice) concerning many of the complaints referenced in this NAL. In the Second Notice, the Branch asked BDP to submit certain information, including audiotape recordings of verification calls and marketing scripts utilized by BDP in soliciting complainants' service. BDP responded with a request for a two-week extension, asserting that it needed additional time to conduct a comprehensive review of BDP's records. The Branch granted BDP an extension with respect to its narrative responses, but denied BDP's request for additional time to submit supporting audiotapes. The Branch noted that BDP's attorney had represented that the audiotapes are categorized to facilitate prompt retrieval. 10. On August 31, 1998, BDP submitted a portion of the material sought by the Branch in its Second Notices. BDP provided some, but not all, of the requested verification audiotapes. According to a letter filed with the Branch, BDP was "working diligently to locate" the missing tapes. To date, however, BDP has failed to provide all of the audiotapes requested by the Branch. With regard to the requested marketing scripts, BDP furnished only one script, identifying it as BDP's "Script for Sales." The text of the script bears no resemblance to the complainants' accounts of their initial sales calls from BDP's telemarketers. Rather, the script appears to track the language used by BDP's third-party verifiers in the audiotapes of verification calls submitted by BDP. B. Consumer Complaint Profiles 11. To best illustrate BDP's apparent pattern of employing unjust and unreasonable telemarketing practices and effecting unauthorized PIC changes, this Order profiles five complaints from small business consumers: Marketing Partners, Inc. of Wheat Ridge, Colorado; Julie Okamoto, D.D.S., of Chicago, Illinois; Diane Kelly, Court Reporter of Centerville, Massachussetts ; TCS Engineering Company, of Nellysford, Virginia; and R&S Investment Group of Las Vegas, Nevada. As set forth below, all of these consumers assert that BDP's telemarketers misrepresented BDP's service as a bill consolidation or business discount plan offered by the complainants' local exchange carriers or preferred interexchange carriers, and that BDP's third-party verifiers perpetuated the pattern of deceit by asking the consumers to confirm that they had authorized a bill consolidation. 12. In addition to the five profiled complaints, the record includes ten slamming complaints that also contain specific allegations that BDP's telemarketers and third-party verifiers mischaracterized BDP's offering as a bill consolidation service offered by the complainants' local exchange carriers or preferred interexchange carriers. These complaints were filed by the following small business consumers: Richard H. Dudley; Strataphysics, Inc.; Lowry Manufacturing, Inc.; MYAC, Inc.; Kelly Research; Mount Prospect Historical Society; Dr. Michele Kotkin; SQ Consultants, Inc.; Sharpless Corporation; and Murphy Appraisal Services, Inc. Pertinent information concerning these complaints is set forth in Appendix A to this Order. 1. The Marketing Partners Complaint 13. The informal complaint filed by Ms. Katrina Fullmer of Marketing Partners, Inc. (Marketing Partners) on January 15, 1998 provides one of the most blatant examples of the apparent fraudulent activity engaged in by BDP in connection with its PIC-change practices. In her complaint, Ms. Fullmer alleges that her company's long-distance service was switched from AT&T to BDP without her authorization. Ms. Fullmer asserts that in December of 1997, she received a call from an individual who claimed he represented a company that does the billing for AT&T and U S WEST. According to the caller, his company was going back to its "old way of billing," and he was making a "courtesy call" to advise Marketing Partners that all charges for local and long-distance calls would soon be combined on one bill "under U S WEST." Ms. Fullmer states that after she agreed to the bill consolidation, she was told that an operator would soon be "on line to verify." 14. Ms. Fullmer asserts that an operator subsequently reiterated that Marketing Partners' local and long-distance calls would be consolidated, and asked Ms. Fullmer whether she "understood." When Ms. Fullmer replied in the affirmative, the operator read her some information so quickly that Ms. Fullmer states she could not understand what the operator was saying. After she asked the operator three times to repeat himself, Ms. Fullmer was finally able to comprehend a company name -- "Business Discount Plan." According to Ms. Fullmer, the rest of the operator's statement was unintelligible. 15. When Ms. Fullmer questioned the operator about the nature of BDP's business, she was advised that BDP does the billing for AT&T and U S WEST, and was given BDP's toll- free customer service number. Ms. Fullmer asserts that when she called BDP, a woman answered the phone without providing the company's name; when prodded, the woman acknowledged that Ms. Fullmer had reached BDP's office. The woman also informed Ms. Fullmer that BDP does "billing only." Suspecting that "someone got us to change our long distance carrier," Ms. Fullmer called BDP back the following day and told BDP that she was "aware of their technique" and that she did not approve a switch in long-distance service. Nevertheless, BDP submitted a PIC- change order to AT&T causing Marketing Partners long-distance service to be switched from AT&T to BDP. 16. The Branch forwarded the Marketing Partners Complaint to BDP along with a Notice, and received in response a brief letter containing boilerplate information and stating that Marketing Partners did not owe BDP any monies for calls made while BDP was Marketing Partners' long-distance carrier. In response to the Branch's Second Notice, BDP filed a letter on August 31, 1998 stating that BDP is "unable to provide" a verification tape associated with Marketing Partners' PIC change. 2. The Okamoto Complaint 17. The complaint submitted by Dr. Julie Okamoto on February 7, 1998 provides another example of BDP's apparently misleading PIC-change practices. In her written complaint, Dr. Okamoto alleges that BDP employed deceptive sales techniques in its effort to change her long-distance service to BDP. As in the Marketing Partners Complaint, Dr. Okamoto alleges that her long-distance service was switched from AT&T to BDP without her authorization under the guise of a "courtesy call" from an "AT&T operator." Dr. Okamoto explains that she received a telephone call at her dental office from an individual identifying himself as an "AT&T operator." According to Dr. Okamoto, the caller stated that he was providing a "courtesy call" to inform businesses of a "new look" for future telephone billing statements. The caller stated that information regarding these changes would be mailed to her in a few weeks, and that no further calls would be made to her office if she verified her name and address with a second operator. Soon after Dr. Okamoto verified this information for the second operator, she discovered that her long-distance service had been switched to BDP. 18. In response to the Consumer Protection Branch's Notice of the Okamoto Complaint, BDP filed a brief letter containing the same boilerplate language included in BDP's response to the Marketing Partners Complaint. In reply to the Second Notice, BDP filed a letter on August 31, 1998, stating that BDP is "unable to provide" an audiotape associated with Dr. Okamoto's PIC change. 3. The Kelly Complaint 19. The complaint submitted by Ms. Diane Kelly, a court reporter, on March 9, 1998 is remarkably similar to the Marketing Partners and Okamoto Complaints. In her written complaint, Ms. Kelly accuses BDP of switching her company's long-distance service from AT&T without her authorization. Specifically, Ms. Kelly states that in January of 1998, she received a telephone call from an individual who identified himself as an AT&T representative. Ms. Kelly contends that the caller spoke quickly, mumbled, and was difficult to understand. Nevertheless, Ms. Kelly asserts, she did not terminate the conversation because the caller had represented that he was affiliated with AT&T, her preferred interexchange carrier. Ms. Kelly contends that the caller explained that he was providing a "courtesy call" to inform businesses of a consolidation of their local and long-distance charges, and that by verifying her billing information, Ms. Kelly could receive a bill consolidation. Ms. Kelly states that she verified her company's billing information, but did not authorize a change in her long-distance carrier. 20. BDP's Response to the Notice of the Kelly Complaint followed the same basic pattern as BDP's responses to the complaints described above. On November 20, 1998, the Consumer Protection Branch issued to BDP a Second Notice concerning the Kelly Complaint. In the Second Notice, the Branch asked BDP to submit an audiotape of the verification call made to Ms. Kelly's office. In response, BDP submitted a copy of an audiotape that, it asserts, demonstrates that Ms. Kelly confirmed she had authorized a PIC change to BDP. Contrary to BDP's contention, however, a review of the audiotape reveals that BDP's third-party verifier discussed a change in Ms. Kelly's billing format, but never mentioned anything about a change in Ms. Kelly's preferred interexchange carrier. 21. As an initial matter, the verifier informed Ms. Kelly that he was calling to confirm the details of Ms. Kelly's conversation regarding her "Bell Atlantic billing getting business discount planning one-bill service." Speaking quickly, the verifier recounted Ms. Kelly's full name and asked whether Ms. Kelly could "approve this." When Ms. Kelly questioned whether the verifier was referring to a bill consolidation, the verifier replied that it was "very simple . . . basically, your AT&T network calls will be routed through the business discount planning, and they will appear upon your local phone company's invoice, so therefore, you make your check out to your local phone company . . . you'll be receiving a one-bill service. Can you approve this?" At this point, Ms. Kelly agreed to a bill consolidation. Promising a "simplified billing format," BDP's verifier then told Ms. Kelly that "the service is currently only for AT&T users spending under five hundred dollars a month," a statement which implies that AT&T, not BDP, offers the long-distance service. The verifier noted that Ms. Kelly would be "remaining on the AT&T network," and mumbled quickly, "changing to business discount planning as your carrier for rates and service for inter and intraLATA calls." The verifier concluded the call by informing Ms. Kelly that there will "be a number on your invoice as usual," another statement suggesting that Ms. Kelly would remain with her preferred interexchange carrier, AT&T. 4. The TCS Complaint 22. The written complaint submitted by Mr. Jim Taggert of TCS Engineering Company (TCS) dated March 19, 1998 provides another example of BDP's apparently deceptive and misleading PIC-change practices. In his complaint, Mr. Taggert alleges that BDP fraudulently converted his company's preferred interexchange carrier from AT&T to BDP without his authorization. Mr. Taggert contends that in January 1998, he received a telephone call from a woman identifying herself as an "AT&T representative." According to Mr. Taggert, the woman stated that she was calling to inform him that TCS's long-distance charges would be consolidated with TCS's charges from Bell Atlantic, TCS's local exchange carrier. Mr. Taggert asserts that he twice asked the caller to confirm that she was with AT&T, and that she responded in the affirmative on both occasions. Nevertheless, when Mr. Taggert reviewed TCS's March 1998 telephone bill, he discovered that his company's long-distance service had been switched from AT&T to BDP. According to Mr. Taggert, he then spent an "enormous amount of time" attempting to contact BDP and return to his preferred interexchange carrier. 23. BDP's response to the Consumer Protection Branch's Notice forwarding the TCS Complaint contains the same boilerplate language and minimal information provided in the responses described above. In reply to the Branch's Second Notice, BDP submitted a copy of an audiotape to support its claim that TCS agreed to become BDP's customer. As with the Kelly audiotape, discussed above, the audiotape submitted in connection with the TCS complaint demonstrates that BDP's third-party verifier misrepresented the nature of BDP's service offering. A review of the audiotape shows that BDP's third-party verifier informed Mr. Taggert that she was calling to discuss TCS's "Bell Atlantic billing getting business discount planning one-bill service." As in the Kelly audiotape, the verifier promised a "simplified billing format," and informed Mr. Taggert that "the service is currently only for AT&T users spending under five hundred dollars per month." Further, BDP's verifier stated that TCS will be "remaining on the AT&T network," and noted that in case of problems, there will be a number on the invoice "as usual." 5. The R&S Complaint 24. In her informal complaint of February 23, 1998, Ms. Dorothy Milford, the office manager of R&S Investment Group (R&S), asserts that BDP converted her company's preferred interexchange carrier from AT&T to BDP without authorization. Ms. Milford alleges that in January of 1998, she received a telephone call from an individual identifying himself as an AT&T representative. According to Ms. Milford, the caller informed her that in the future, R&S's charges for AT&T long-distance service would be included on her bill for local exchange services. Ms. Milford asserts that the caller "reiterated several times" that he was with AT&T, and "that the only change would be lack of a separate billing." Moreover, Ms. Milford contends that "[a]t no time was the fact mentioned that this call concerned switching my long distance carrier." In fact, Ms. Milford asserts, "care was taken to make me believe that I would remain with AT&T with no difference except lack of a separate bill." At no time, Ms. Milford states, did she "authorize or even suggest" that she would be willing to change long-distance carriers. Nevertheless, when Ms. Milford reviewed R&S's February 1998 telephone bill, she discovered that the company's long- distance carrier had been switched to BDP without her authorization. 25. BDP's response to the Consumer Protection Branch's Notice of the R&S Complaint consists of a brief letter containing boilerplate language and minimal information. In reply to the Branch's Second Notice, BDP submitted a copy of an audiotape which, BDP asserts, demonstrates that R&S agreed to become BDP's customer. Contrary to BDP's claim, however, a review of the audiotape demonstrates that, as with Ms. Kelly and Mr. Taggert, discussed above, BDP's verifier misrepresented the nature of BDP's service offering. BDP's verifier stated that she was calling to discuss R&S's "billing with business discount planning one- bill service," and stressed that she was calling simply to inform R&S of a change in billing format. C. The Remaining Consumer Complaints 26. The remaining fifteen consumer complaints that are the subject of this NAL similarly allege that BDP fraudulently changed consumers' PICs without their authorization. In the majority of these cases, consumers cannot recall having had any contact with BDP prior to discovering unauthorized long-distance charges from BDP on their telephone bills. Nevertheless, we find it reasonable to accept that based on the clear pattern of deceptive behavior established in the record, BDP's telemarketers and third-party verifiers deceived these consumers as well by misrepresenting BDP's service as a bill consolidation plan offered by the consumers' local exchange carriers or preferred interexchange carriers. Indeed, it is likely that these consumers could not recall any contact with BDP because BDP's telemarketers and third-party verifiers misrepresented that they were affiliated with the consumers' local exchange carriers or preferred interexchange carriers. Under these circumstances, we will treat all thirty complaints in the record as establishing an apparent pattern of conduct by BDP to employ deceptive telemarketing practices in soliciting consumers to change their long-distance service providers. III. DISCUSSION A. Violations Evidenced in the Complaints 1. Summary 27. The consumer complaints described above and BDP's inadequate responses depict a callous disregard for the requirements of the Communications Act and the Commission's rules and orders. In particular, BDP's deceptive and fraudulent telemarketing practices and BDP's failure to obtain authorization from consumers before submitting a PIC-change request evidence apparent willful or repeated violations of sections 201(b) and 258 of the Act, as well as Commission rules and orders pertaining to PIC changes. 28. As explained below, BDP's fraudulent representation of its offering as a bill consolidation service, as well as its repeated efforts to obscure the true nature of its service offering, appear to constitute "unjust and unreasonable practices" within the meaning of section 201(b). In addition, the record supports a finding that BDP apparently willfully or repeatedly violated section 258 of the Act and the Commission's rules and orders governing PIC changes in connection with the unauthorized PIC changes alleged by the complainants. 2. Section 201(b) of the Communications Act 29. Section 201(b) of the Act provides in pertinent part that "[a]ll charges, practices, classifications, and regulations for and in connection with . . . communication service shall be just and reasonable . . . ." Based on our review of the consumer complaints before us, we find that BDP's business practices were unjust and unreasonable under section 201(b). First, BDP's business practices appear to have been intended to mislead customers into enrolling in BDP's service. The complaints reveal that BDP's telemarketers apparently misrepresented or implied to customers: 1) that BDP was affiliated with the customer's existing local or long-distance carriers; 2) that the customer's long-distance service would remain with the existing carrier; and 3) that the customer's new long-distance charges would be discounted. In addition, it appears that BDP personnel routinely misrepresented that BDP's service consisted solely of a "consolidated billing service" that would simplify customers' telephone bills by combining local and long distance charges on one bill. Apparently, BDP representatives failed to inform customers that by agreeing to a bill consolidation, they would be switching their long-distance carrier to BDP and would be paying BDP's higher rates. 30. Further, BDP reasonably should have anticipated that consumers could have been misled by its selection of the deceptive company name, "Business Discount Plan." When viewed against the backdrop of the complaints before us, BDP's name appears to have been designed solely to persuade customers that they would be enrolled in a generic "business discount plan" offered by their existing long-distance carrier, as opposed to a long-distance service provided by a company named "Business Discount Plan." The misleading nature of BDP's name is underscored by the fact that despite the word "discount" in its name, BDP's rates are higher than AT&T's rates for basic business services. 31. In order to ensure that marketing practices are fair and nondeceptive, it is incumbent upon telemarketers to adequately inform potential customers of: 1) the identity of the telemarketer; and 2) the nature of the product the telemarketer is selling. In the instant case, it is clear that the complainants did not understand that they were speaking with a reseller who was trying to switch their long-distance service. This appears to have been due primarily to BDP's repeated mischaracterization of its role as a long-distance provider. As noted above, resellers purchase bulk telecommunications services from other providers and resell these services to their customers. Switchless resellers such as BDP use their access to other carriers' facilities to provide their own long-distance service to their customers. Hence, BDP, not the long-distance carrier that originally sold bulk telecommunications service to BDP, is considered the "carrier" of the long-distance service. BDP's tariff, not the underlying carrier's tariff, sets forth the rates, terms, and conditions under which BDP's customers will receive long-distance service. And it is BDP, not the underlying carrier, that bills its customers for service provided pursuant to BDP's tariff. 32. The complaints reveal that BDP's sales personnel fraudulently represented or implied that BDP was affiliated with or otherwise represented customers' existing local or long- distance carriers, when this was in fact not the case. For example, BDP's verifier informed Mr. Taggert of TCS was that she was calling to discuss TCS's "Bell Atlantic billing with business discount plan one-bill service." Although BDP purchased long-distance service from AT&T and resold it to TCS, BDP was TCS's carrier, not AT&T. Further, the audiotapes described above demonstrate that BDP's third-party verifiers repeatedly told the complainants that they would be "remaining on the AT&T network." Although the complainants' traffic would continue to be carried over facilities owned by AT&T, BDP used the statement in a manner apparently designed to mislead the complainants into believing that they would continue to be customers of AT&T, when in fact they were customers of BDP. Indeed, BDP's statements fueled customers' reasonable expectations that they would be remaining with their preferred long-distance carriers. BDP knew, or should have known, that customers acting reasonably under the circumstances would be misled or confused by misrepresentations regarding the material issue of BDP's identity, and that customers would rely on such misrepresentations to their detriment. 33. Furthermore, the record establishes that BDP's deceptive marketing and sales techniques ensured that customers had virtually no understanding of the product that BDP was offering. Based on BDP's sales pitch, customers should have been entitled to expect that if they agreed to enroll in a "business discount plan," they would receive a discount plan from their current carrier and a consolidated bill that combined their local and long distance telephone charges. There was nothing in BDP's telephone solicitations or verification calls to suggest that customers' PICs would be changed. Indeed, the record shows that BDP's verifiers led customers to believe that they were simply verifying their names and addresses for a complimentary bill consolidation. As Dr. Okamoto stated in her complaint, a BDP verifier promised that if she verified her name and address, Dr. Okamoto would avoid any further calls about a "new look" for future billing statements. Unbeknownst to Dr. Okamoto, BDP changed her PIC based on this verification. Nor did BDP's telemarketers make clear that under BDP's "business discount plan," customers would be charged long-distance rates that are at least 20 percent above AT&T's basic rates. BDP reasonably should have realized that its deceptive telemarketing practices obscured the nature and price of its "product," which are material facts. The record demonstrates that customers would not have agreed to a "new billing format" if they had understood that BDP would be changing their PICs and charging them higher long-distance rates. 34. Based on the foregoing discussion, it appears that BDP knowingly misrepresented both its identity as a reseller and the nature of its service offering in an effort to intentionally mislead small business customers, who relied, to their detriment, on BDP's misrepresentations of these material facts. As a result of being slammed, these customers lost the benefits of the "bargains" they had struck with their preferred carriers. Such benefits could include, but not be limited to, significantly lower long-distance charges and incentive programs (such as optional calling plans). Moreover, the record reflects that customers suffered frustration and inconvenience as they sought to discover the cause of their unauthorized PIC changes and return to the carriers of their choice. 35. BDP's limited responses to the consumer complaints referenced herein provide no evidence or information to counter the complainants' claims that BDP misrepresented the nature of its service in an apparent effort to obtain complainants' authorization for PIC changes. Indeed, BDP refused to provide any supporting audiotapes of its telemarketers' initial sales calls, claiming that it was not BDP's practice to tape sales calls. As the record shows, however, many of the complaints focus on allegedly deceptive and misleading statements made by BDP's telemarketers. By declining to provide tapes of its telemarketers' initial sales calls to complainants, BDP has failed to furnish any evidence to refute the complainants' allegations of unjust and unreasonable practices on the part of BDP's telemarketers. 36. Moreover, the audiotapes submitted by BDP fail to negate the complainants' assertions that during verification calls BDP's third-party verifiers misrepresented the nature of BDP's service offering. Rather, the proffered audiotapes tend to support the complainants' allegations that BDP engaged in unjust and unreasonable business practices by furnishing false or misleading information regarding the nature of BDP's service offering. For example, in the audiotape submitted in connection with the R&S Complaint, BDP's third-party verifier deceptively states that she is calling to discuss "billing with business discount planning one-bill service," which the verifier further characterizes as a "simplified billing format." The other audiotapes in the record similarly demonstrate that BDP's third-party verifiers described BDP's offering as a bill consolidation service rather than as a distinct long-distance service offering. Hence, in light of the egregious behavior evidenced by the audiotapes of the verification calls, as well as BDP's failure to provide the Commission with any information to contradict the complainants' allegations of misleading telemarketing calls, we find that BDP's telemarketing practices demonstrate apparent willful or repeated violations of sections 201(b) of the Act. 3. Commission Rules and Orders Concerning Slamming; Section 258 of the Communications Act 37. In addition to evidencing apparently unjust and unreasonable practices within the meaning of section 201(b), the complaints before us demonstrate that BDP apparently failed to obtain consumers' authorization prior to requesting changes in their long-distance service. As discussed below, we conclude that BDP's actions also constitute apparent violations of section 258 of the Act and the Commission's rules and orders governing slamming. 38. In its Allocation Order and subsequent Reconsideration Order, the Commission set forth rules and procedures for implementing equal access and the customer presubscription process. Pursuant to this process, each customer selects one preferred interexchange carrier from among several available carriers, for the customer's phone line(s). To ensure that carriers obtain the requisite authority prior to changing a customer's long-distance carrier, the Commission requires that interexchange carriers (IXCs) either obtain a signed letter of agency (LOA) or, in the case of telemarketing solicitations, follow one of the telemarketing verification procedures before submitting PIC-changes to LECs on behalf of consumers. Section 258 of the Act, adopted in 1996, affirms and expands the Commission's authority to deter, punish, and ultimately, eliminate slamming by making it unlawful for any telecommunications carrier 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 procedures as the Commission shall prescribe." 39. The statements and other information provided by the complainants, and the limited responses by BDP, represent credible and compelling evidence that BDP failed to obtain the complainants' authorization prior to submitting PIC-change orders. First, the record provides substantial evidence that 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 was seeking to change their PICs. In the Marketing Partners Complaint, for example, Ms. Fullmer asserts that the BDP telemarketer who slammed her merely stated that he was making a "courtesy call" to advise Marketing Partners that all charges for local and long- distance calls would soon be combined on the local exchange carrier's bill. Another complainant, Dr. Okamoto, found that her service had been switched without her authorization after she received a "courtesy call" from an individual purporting to be an AT&T operator. According to Dr. Okamoto, the individual made no mention of any change in long-distance carriers, much less to BDP. 40. Further, there is ample record evidence to demonstrate that BDP's verifiers routinely mischaracterized the nature of the information they were purportedly verifying. The Commission's rules and orders and section 258 of the Act are intended to ensure that independent third-party verifiers indicate that the purpose of their call is to verify that a customer has authorized a change in his or her long-distance service provider. Nevertheless, BDP's verifiers apparently created a false impression by advising customers that they were confirming a bill consolidation, all the while assuring customers that they would remain on their existing carriers' networks. For example, in the audiotaped verification submitted in connection with the TCS Complaint, the verifier states that she is calling to confirm that TCS had agreed to a simplified billing format. Clearly, however, BDP's verifier could not "confirm" that TCS had in fact authorized a PIC change because BDP's telemarketer had failed to obtain Mr. Taggert's authorization in the first instance. 41. In sum, the statements and other information provided by the complainants, and the limited responses by BDP, demonstrate that BDP apparently: (1) employed unjust and unreasonable telemarketing practices; and (2) changed complainants' PICs without their authorization. As described above, BDP has failed to provide any evidence or information to counter the complainants' claims. Accordingly, we conclude that BDP has apparently willfully or repeatedly violated sections 201(b) and 258 of the Act and the Commission's rules and orders pertaining to PIC changes. B. Forfeiture Amount 42. BDP's apparent use of unjust and unreasonable telemarketing practices and its apparent failure to obtain authorization to effect changes in the long-distance service of the consumers described in this NAL persuades us that a significant forfeiture is warranted against BDP for willful or repeated violations of sections 201(b) and 258 of the Act and the Commission's rules and orders regarding slamming. Section 503(b) of the Communications Act authorizes the Commission to assess a forfeiture of up to $110,000 for each violation of the Act or of any rule, regulation, or order issued by the Commission under the Act. In exercising such authority, we are required to take into account "the nature, circumstances, extent, and gravity of the violation and, with respect to the violator, the degree of culpability, any history of prior offenses, ability to pay, and such other matters as justice may require." The Commission's forfeiture guidelines currently establish a standard forfeiture amount of $40,000 for violations of our rules and orders regarding unauthorized changes of preferred interexchange carriers. These policies and guidelines include "upward adjustment criteria" that warrant a higher forfeiture amount based on our evaluation of the particular actions and circumstances of the violator. These 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. Although the forfeiture guidelines do not establish a forfeiture amount for unjust or unreasonable practices, such as engaging in deceptive telemarketing practices, the guidelines state that, ". . . any omission of a specific rule violation from the . . . [forfeiture guidelines]. . . should not signal that the Commission considers any unlisted violation as nonexistent or unimportant." The Commission retains the discretion, moreover, to depart from the guidelines and issue forfeitures on a case-by- case basis, under its general forfeiture authority contained in section 503 of the Act. 43. In calculating BDP's forfeiture, we consider each unauthorized conversion of the preferred interexchange carrier of a complainant to constitute a separate violation for which we will apply our standard $40,000 forfeiture amount. Thus, we find that BDP is apparently liable for a forfeiture of $1,200,000 for the unauthorized conversion of the thirty complainants' preferred interexchange carriers in violation of section 258 of the Act. In addition, we consider each instance that BDP engaged in an unjust and unreasonable telemarketing practice in violation of section 201(b) of the Act to constitute a separate violation. As evidenced by the record, BDP's deceptive telemarketing practices were aimed at slamming consumers. Therefore, based upon our broad discretion to issue forfeitures on a case-by-case basis, we find that under these circumstances, the standard $40,000 forfeiture amount applied for slamming violations is an appropriate guideline to use in assessing a forfeiture for the section 201(b) violations before us. Accordingly, we find that BDP is also apparently liable for a forfeiture of $1,200,000 for engaging in unjust and unreasonable telemarketing practices with regard to each of the thirty complainants identified in this NAL. Taken together, the forfeitures we assess for violations of sections 201(b) and 258 of the Act result in a total forfeiture amount of $2,400,000. BDP shall have the opportunity to submit evidence and arguments in response to this NAL to show that no forfeiture should be imposed or that some lesser amount should be assessed. 44. Finally, we note that our review of BDP's inadequate responses indicates a need for the Commission to continue to monitor BDP's PIC-change practices. We, therefore, require BDP to file with this Commission a compliance plan that shall include procedures designed to promptly identify and address consumer inquiries and concerns about BDP's PIC-change practices. The compliance plan shall also detail actions BDP will take and procedures it will establish to comply with the Act and with the Commission's rules and orders The Commission will closely monitor the level and content of consumer complaints to determine whether the establishment of BDP's proposed management practices leads to a decrease in unauthorized PIC changes. VI. CONCLUSIONS AND ORDERING CLAUSES 45. We have determined that BDP apparently violated sections 201(b) and 258 of the Communications Act and the Commission's PIC-change rules and orders by engaging in unjust and unreasonable telemarketing practices and by converting the PICs of the thirty consumers identified above, on the dates and in the manner described herein. We have further determined that BDP is apparently liable for a total forfeiture amount of $2,400,000. 46. Accordingly, IT IS ORDERED, pursuant to section 503(b) of Communications Act of 1934, as amended, 47 U.S.C.  503(b), section 1.80 of the Commission's rules, 47 C.F.R.  1.80, that Business Discount Plan, Inc. IS HEREBY NOTIFIED of an Apparent Liability for Forfeiture in the amount of $2,400,000 for willful or repeated violations of sections 201(b) and 258 of the Act and the Commission's PIC-change rules and orders as described in the paragraphs above. 47. IT IS FURTHER ORDERED, pursuant to section 1.80 of the Commission's rules, 47 C.F.R.  1.80, that within thirty (30) days of the release of this Notice, Business Discount Plan, Inc. SHALL PAY the full amount of the proposed forfeiture OR SHALL FILE a response showing why the proposed forfeiture should not be imposed or should be reduced. 48. IT IS FURTHER ORDERED, pursuant to section 4(i) of the Communications Act of 1934, as amended, 47 U.S.C.  154(i), that Business Discount Plan, Inc. SHALL FILE with the Commission, within thirty (30) days of the date of this NAL, a compliance plan detailing the actions it has taken and the procedures it has established, to ensure compliance with sections 201(b)and 258 of the Act and the Commission's rules and orders relating to PIC changes. The compliance plan shall set forth procedures designed to enable Business Discount Plan, Inc. to promptly identify and address consumer inquiries and concerns about its PIC-change practices. 49. IT IS FURTHER ORDERED that copies of this Notice of Apparent Liability for Forfeiture SHALL BE SENT by certified mail to: Thomas David Jenkins, Owner and President, Business Discount Plan, Inc., 3780 Kilroy Airport Way, Suite 200, Long Beach, California, 20806; and to Craig Konrad, Vice President, Business Discount Plan, Inc., 3780 Kilroy Airport Way, Suite 200, Long Beach, California, 90806. FEDERAL COMMUNICATIONS COMMISSION Magalie Roman Salas Secretary STATEMENT OF COMMISSIONER HAROLD FURCHTGOTT-ROTH Re: Business Discount Plan, Inc. Apparent Liability for Forfeiture (Enf No. 98-02). Today the Commission issues a Notice of Apparent Liability for Forfeiture against Business Discount Plan, Inc. for violating Sections 201(b) and 258 of the Communications Act by misrepresenting their service offering and for the unauthorized change of a customer's preferred long distance carrier ("slamming"). Slamming and other fraudulent business practices are a growing concern for consumers and this agency, and I congratulate the Commission on taking steps to combat these problems. Providing false information to consumers corrupts free markets and will not be tolerated. I also caution consumers, however, that they must be more vigilant in their own defense. It is not within this agency's legal authority to protect consumers from mere aggressive marketing. Neither the urging of a salesman nor a consumer's inability to understand a service offering justifies the Commission's intervening in otherwise legitimate contracts. While this agency should and will do what it can to ensure that false information and fraudulent activities are not tolerated, consumers themselves need to become vigilant against accurate but aggressive marketing techniques. In such a situation it is consumers, not the federal government, that can ensure that only the services actually requested by the customer are accepted. Before we proceed much further with enforcement of slamming rules as they relate to marketing, the Commission should develop clear and unambiguous rules delineating permissible marketing practices from impermissible practices. We do not yet have such rules on either a prospective or retrospective basis, and it is consequently difficult to defend FCC judgments about slamming under specific circumstances.