My name is Sonny Popowsky. I am the Consumer Advocate of Pennsylvania. Thank you for the opportunity to testify before your Committee on the issue of "slamming" in general and on House Bill 1596 in particular.
Slamming, or the unauthorized switching of a customer's utility service provider, has been a persistent and pernicious problem that has continued to exist for many years despite the efforts of state and federal legislators and regulators to address this problem. The most well-known form of slamming is the switching of a consumer's long distance telephone provider without the consumer's knowledge or consent.
It's easy to see why slamming found a home on the long distance portion of consumers' phone bills -- more so than in any other form of commerce. A typical phone bill often is several pages long, much of which is difficult or time-consuming to understand. Rather than try to make sense over a jumble of different charges and surcharges on a variety of local, long distance and optional services, many customers would simply go straight to the bottom line, and pay their bill. The phone bill therefore is an ideal place to hide illegal charges. Because the phone bill also includes the charge for basic local telephone service, which is a virtual necessity of life for most American consumers, many consumers will pay their phone bill every month even if it contains charges that they do not fully understand, from companies that they may have never heard of. In fact, under Pennsylvania regulation, customers cannot lose their basic local service because of a failure to pay their long distance or any other optional non-basic phone charge. But many consumers are not aware of this protection and, in any case, do not want to get involved in protracted disputes that they believe might in some way jeopardize their phone service.
It is my understanding, however, that the number of long distance slamming complaints is no longer on the rise, and may in fact be declining both in Pennsylvania and across the Nation. This may be due, in part, to the fact that many long distance providers now bill separately from the local service provider and therefore it is immediately apparent to consumers if their long-distance provider has been switched. In addition, state and federal enforcement of anti-slamming rules may have had some effect. For example, my Office intervened in one particularly egregious case before the Public Utility Commission where an elderly Philadelphia woman claimed that her husband's name had been forged on a form that allegedly authorized a switch to another long distance company. Her claim was buttressed by the fact that shortly before the alleged switch, her husband had suffered a debilitating stroke which would not have permitted him to sign the authorization form even if he had wanted to. Given the fact that this case involved actual forgery as well as slamming, the PUC agreed with our Office that a substantial penalty was justified and therefore fined the company $20,000.
I also believe that public education and public awareness have helped reduce the occurrence of slamming as well as other types of fraud in the provision of telecommunications services. Many consumers are now well-aware of the term "slamming" and recognize that they need to read their telephone bills carefully -- as boring and as painful as that may seem. In addition, hearings like this one, even when they don't result in legislation, are beneficial in informing the public about this problem and how to avoid having it happen to them. In that vein, I would note that our Office has almost invariably been able to resolve slamming complaints that we receive by getting customers returned to their chosen carrier at no cost, and often obtaining refunds of any overcharges resulting from their unauthorized switch. And, as I noted above, we are also willing to assist customers who wish to take their case further in particularly egregious situations where some further penalty is warranted. Consumers who need our assistance on slamming or any other utility-related issue can now call our office toll-free at 800-684-6560.
Turning to House Bill 1596, I would like to express my support for this Bill with one possible reservation that I will discuss below.
First, this Bill recognizes that slamming can occur in any segment of telecommunications service, whether local, regional, or long distance toll, and the Bill thus applies to each of these types of slamming. Second, the Bill makes it clear that the Pennsylvania Public Utility Commission has the authority to enforce anti-slamming procedures promulgated by the Federal Communications Commission and, importantly, has a wide range of penalties -- including fines and even revocation of a provider's certificate to offer service in Pennsylvania -- that can be imposed on companies that violate this law. The Bill also requires the Commission to collect data and report to the General Assembly each year regarding the number and the nature of slamming violations by each provider. This report must also be posted publicly via the Internet.
My one reservation concerning this proposed legislation is the requirement in Section 2(a) that a change may be made in a telephone subscriber's carrier only "if the subscriber agrees to the change in writing." While such a requirement seems reasonable, and I myself would have made such a recommendation not too long ago, I think this requirement may be too restrictive at this time. The FCC has not imposed a written verification requirement, but has recognized that alternative types of verification, such as electronic or truly independent third party verifications may also be utilized. This makes sense in today's Internet and telecommunications-driven economy. Similarly, our PUC has permitted alternative forms of verification in our electric choice program. In contrast, New Jersey initially imposed a so-called "wet signature" requirement for changes in its electric choice program. That requirement was generally reported to be a major factor in the New Jersey program never getting off the ground, even though it was otherwise closely modeled on the Pennsylvania program. In particular, the New Jersey rule blocked customers from signing up for service over the Internet, which proved to be a significant drawback for many marketers.
I would caution against being overly restrictive with respect to the specific verification rules that service providers must follow when they sign up customers. I would urge both the General Assembly and the Commission to utilize authorization and verification standards for service providers that are consistent with the applicable federal standards. It is important to ensure that protections against slamming not be permitted to prevent bona fide competition. I would urge the General Assembly to affirm the Public Utility Commission's authority to prevent unwanted service changes, but not allow slamming prohibitions to be used for anti-competitive purposes. I believe it is important to have legislative authority that is as strong as possible to prevent slamming, but it is also important to be flexible in order to adapt to changing conditions and also to make it possible for law-abiding service providers to compete successfully to serve Pennsylvania consumers in a manner that is consistent with both state and federal law. Crafting appropriate anti-slamming legislation requires some difficult policy calls and careful drafting. The easier it is for consumers to change their telephone company, the easier it is for carriers to find ways to switch consumers' service without their knowledge or consent. On the other hand, the harder it is to change service providers, the more difficult it becomes for consumers to shop for new services and for new entrants in the market to compete. Generally, I believe that the current FCC regulations that are also referenced in Section 2(a) of House Bill 1596 strike an appropriate balance without requiring a written Change Order in all circumstances. Indeed, I would note that reliance on written signatures alone may also be inappropriate because we have seen that some writings can be forged, and that others, particularly in the case of door to door sales, can result from oppressive sales tactics.
With the above caveats, I would reiterate my support for strong Pennsylvania slamming legislation, such as that which is before this Committee today. I commend this Committee for holding this hearing and thereby helping to raise public awareness of this issue, and I offer the assistance of my Office in helping the members of the General Assembly determine the best way to address this important concern.