To: Editors, News Directors

Date: December 9, 2002

For: Immediate Release

Slamming & Cramming Rules Readied for Attorney General Review, Transmittal to Secretary of State

PHOENIX - Slamming and cramming, deceptive business practices that cause headaches for consumers, is about to get harder to perpetrate in Arizona. Consumers are poised to gain important new rights governing how telephone companies make changes to their accounts. Slamming is the unauthorized switching of telecommunications carriers. Cramming is the addition of services that are not requested or authorized by the customer.

The rules package cleared its last hurdle at the Commission today when the regulators unanimously approved the final language. The rules package imposes stiff penalties on any company caught slamming or cramming a customer. The Commission can impose financial penalties and, ultimately, could revoke a company's authority to do business in the state if the Commission finds that a company engages in these fraudulent and deceptive practices.

The rules package is being forwarded to the Arizona Attorney General's Office for certification. The Attorney General is allowed 60 days to complete the certification process, per Arizona Revised Statute Section 41-1044 (D). After certification, the rules move to the Secretary of State and become effective 60 days later. Barring any unforeseen circumstances, the Commission could begin resolving slamming and cramming complaints in March or April 2003.

Until then, the Commission is tracking complaints and will help direct customers who believe they are victims of slamming or cramming to the appropriate parties for assistance. Consumers can call 602-542-4251 from the Phoenix metro area or 1-800-222-7000 from elsewhere in Arizona.

The rules incorporate the following key provisions:

• Explicit consumer authorization is required before a company can make any changes to a customer's service.

• Consumers are not responsible for unauthorized charges and cannot be disconnected for failure to pay disputed charges.

• Companies must refund any unauthorized charges. Under the slamming rules, companies are obligated to refund 150% of the unauthorized charges (100% of charges for cramming).

• Telecommunications companies will be required to publish an annual notice of consumers' rights in English and Spanish, similar to what is provided to credit card holders. The notice will also advise customers to report slamming and cramming to the Arizona Corporation Commission.

• The Commission will assist in investigating and resolving slamming and cramming complaints through an informal complaint process and if the resolution is unsatisfactory to the customer, he or she can file a formal complaint.

• Changes in provider would require one or more of the following: 1) Written authorization from the customer; 2) Voice recording; 3) Electronic authorization with third party verification. Third party verification requires the companies to connect the customer with a completely unrelated or unaffiliated company to verify the customer's request.

• Companies will be required to keep electronic voice recordings, written authorizations or third party verification records for a minimum of 24 months.

• For any telecommunications company that continues to abuse customers, the Commission could revoke their certificate and bar them from doing business in the state.

• Telecommunications companies must file, under seal, a copy of all scripts used by its sales or customer service workers.

The entire slamming and cramming rules package applies to any phone service provider operating in Arizona, including wireless carriers.

The proposed rules are posted on our website (www.cc.state.az.us) under the link marked "Utilities Division." The following link should take you directly to the appropriate page: http://www.cc.state.az.us/utility/telecom/slam-cram-index.htm.

Attachment:

Flowchart - Rulemaking Process