Long-Distance Scams Irk Consumers

RICHARD KONIGSBERG made a conscious choice when he selected Cable & Wireless as his company's long-distance telephone carrier in 1990. But five years later, the Maryland accountant was incensed to learn that the whole time he was doing business with AT&T.

"I never made any switch," Mr. Konigsberg says. But somehow, someone authorized his local telephone company to switch his long-distance service. "It reminds me of George Orwell's 1984," he says.

His reaction is mild compared to thousands of other irate telephone customers who are complaining about what they consider a major telemarketing scam.

In a scramble for new customers, long-distance companies are resorting to trickery and outright fraud, charge some consumers. Congress and the Federal Communications Commission (FCC) are getting deluged with complaints about "slamming" - the use of slick telemarketing, mailings, and public prize drawings to get people to switch, often unwittingly, long distance carriers.

"People really get angry that someone is taking away their freedom of choice," says Kathleen Wallman, chief of the FCC's common carrier bureau, which oversees long-distance service.

The offenders, she says, include the big three (AT&T, Sprint, and MCI), as well as resellers of their long-distance service, and smaller long-distance carriers.

While slamming has occurred since the break-up of AT&T in 1984, abuses have escalated in recent years as an increasing number of competitors battle for business. In 1993, some 1,700 people filed complaints to the FCC. The number shot up to 2,500 last year. And judging from the rate of filings this year, the number could well top 10,000.

"That's the tip of the iceberg," says Ms. Wallman. With an enforcement division of 60 people, the FCC is investigating every complaint it receives. More than two dozen states want the federal government to crack down.

An MCI official, who requested anonymity, says his firm and the other big three long distance companies support tighter restrictions on slamming. The practice is costing them market share, he says.

The big switch

Wallman estimates there are roughly 25 million switches a year, with the vast majority done with the consent of both suppliers and customers.

Indeed, many enterprising and savvy long-distance users like to play the switching game.

For some people, says Don Doll, an information-security expert, "It's a good way to pick up $50 or $100 while one company will pay to add you to their client base and another will pay to get you back." But, he adds, many more wind up with a change they didn't ask for "and paying more while getting less service for the switch."

"Usually the agreement is so unreadable, or written in such dull language, the average person would not take the time to read it or would not understand it if he did," Mr. Doll says.

Bradley Stillman of the Consumer Federation of America agrees. He recently spotted a sweepstakes display at a muffler shop in suburban Maryland. By peering through a magnifying glass, Mr. Stillman says, "you'd find that by signing the entry form, you'd be authorizing a switch to the sweepstake's long-distance carrier sponsor."

For the most part, though, the solicitations arrive in the mail in the form of personalized checks or entry blanks for free airline tickets. And long-distance carriers are effective telemarketers, with salespeople placing calls when their targets are most off-guard, critics say - during busy office hours or at the end of the day when people return home from work or sit down to dinner.

Simply cashing that check, sending for the airline tickets, or responding to a telemarketing pitch may be an "implicit agreement that says 'transfer my long-distance carrier line,'" warns Doll. The marketers then notify the local telephone companies - the Baby Bells - that the customers have requested the switch.

Lists for cash

Doll says firms go to great lengths to secure one another's customer lists. "They're sold as a commodity on the street, and they bring in big money," he says. Often, lists are made available by disgruntled or recently laid-off employees, as well as contractors who want to make some cash. And companies engage in what's known as "dumpster dieting:" going through the trash of corporations in search of client access numbers and assorted competitive information.

Konigsberg, who added his case to the long list of complaints with the FCC, says his office is still inundated by pestering solicitations from long-distance carriers promising money, free trips, and other prizes in exchange for a transferred account. He wants the federal agency to demand that long-distance carriers get a switch request in writing "before they're allowed to make the shift."

* Next: How consumers can keep from being slammed.