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Verizon slammed for long-distance "slamming"

The company agrees to pay $1.75 million for signing up as many as 34,000 long-distance customers in New York without their permission.

Verizon Communications has been signing up long-distance customers like mad since entering the New York market earlier this year, but federal regulators think some of those customers joined against their will.

As a result, Verizon has agreed to pay $1.75 million in fines.

The Federal Communications Commission on Tuesday fined Verizon $250,000 as part of a settlement with the newly combined Bell Atlantic and GTE. The FCC had been investigating Verizon for possible slamming, in which customers are signed up for long-distance service without their permission.

The investigation began when Verizon notified the FCC that it didn't have records for some long-distance customers that had been signed up by third parties.

Slamming is considered by the commission to be the No. 1 consumer concern in telecommunications, and the agency's newly created Enforcement Bureau has been aggressive in tracking down possible violators.

Verizon said it will reimburse 34,000 New York customers $1.5 million for long-distance calls they made during the time the Bell company sought to uncover how they had ended up as Verizon customers, possibly without their knowledge.

"This was a self-discovery, a self-divulging process," said Verizon spokesman Bob Bishop.

Verizon said in a statement that it discovered during a routine audit of third-party supplier records in March that "verification records for some customers had been incorrectly stored." The FCC requires long-distance providers to verify all third-party records to ensure that people actually authorized the switch in providers.

Safeguards have been installed to ensure this doesn't happen again, Verizon said.

All of the major long-distance providers, including AT&T, WorldCom, Sprint and Qwest Communications International, have been investigated at one time or another for slamming, usually because of third-party transgressions.

GTE has been providing long-distance service for decades, but the fine levied Tuesday was on the former Bell Atlantic for its operations in New York. Verizon is only the second Bell company to receive permission to offer long-distance somewhere in its territory; SBC Communications was the first, in Texas.

Verizon has filed for permission to offer long-distance in Massachusetts. On Monday the state Department of Telecommunications and Energy OK'd the company's petition, leaving the decision in the hands of the Justice Department and the FCC. Justice must act by Oct. 27, the FCC by Dec. 21.

Slamming is not the only headache Verizon has in New York. When it received permission to enter the long-distance market, it had to provide state and federal regulators proof that its rates for competitors to gain access to its network elements were cost-based. It turns out some of Verizon's data were faulty, and the state Public Utilities Commission is expected to reduce those rates shortly.