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CWA Calls on FCC to Investigate Harmful Corporate Sales Practices in Telecom Industry

Friday, October 13, 2017

Read the full filing

The Communications Workers of America called on the Federal Communications Commission to more fully investigate the causes of unethical sale practices that result in cramming and slamming – a serious problem across the telecommunications industry. This is a critical step in developing effective consumer protections that apply to all voice communications providers, whether traditional landline, interconnected VoIP or wireless, CWA said.

CWA submitted comments today in response to the FCC’s proposed rulemaking on methods to protect consumers from unauthorized changes and charges, to empower consumers to take action against slammers and crammers and to deter carriers from unethical sales practices.

CWA knows that good consumer and good employment practices go hand in hand. That’s why this union works hard to promote fair compensation practices and working conditions for frontline employees as the key to ensuring quality customer service.

It is critical that the FCC fully investigate the relationship between sales quotas, incentives, performance management systems and unauthorized and fraudulent charges on bills. These unscrupulous sales practices, including unrealistic sales incentive structures and punitive performance management systems, force frontline employees to meet unrealistically high sales quotas and benchmarks or face the loss of compensation and their jobs, CWA said. 

There is clear evidence to show that companies that impose unrealistically high sales quotas on sales and service representatives are responsible for driving unethical sales practices. That was the conclusion reached by the Consumer Financial Protection Bureau (CFPB) in its investigation of Wells Fargo Bank’s fraudulent account scandal, which resulted in some 3.5 million services being fraudulently added to customers’ accounts.

CWA, with the Committee for Better Banks, a coalition of frontline bank workers and community groups, was a driving force in spotlighting the ways that Wells Fargo’s extreme and unrealistic sales quotas and incentive structures forced some employees to cram unauthorized services and products onto customer accounts.   

As part of its $100 million enforcement action against Wells Fargo, the CFPB recommended that the bank hire an independent consultant to review its procedures, including the bank’s performance measurements and sales quotas. Following that review, Wells Fargo eliminated sales goals and implemented a new compensation structure that emphasizes customer satisfaction, the CWA filing noted.

CWA believes that the FCC should look to frontline workers to learn about the real world dynamics driving unethical sales practices in the telecommunications industry.

Similar to the Wells Fargo case, unreasonable sales policies have been adopted by many telecommunications carriers, CWA wrote, citing “unrealistically high sales quotas, incentive pay compensation plans, and performance management systems that force sales and service representatives to engage in unethical sales practices in order to meet the quotas or earn sales incentives.  Aggressive performance management systems discipline sales employees for failure to make the monthly sales quota and revenue benchmarks. Typically, failure to meet sales quotas for three time periods can lead to termination. The resulting high turnover impacts customer service, as new hires often lack the experience to provide quality service to customers. The constant pressure to sell also privileges sales over attention to quality customer service,” the filing stated.

The wireless industry is a major source of cramming complaints, yet “the Commission has paid insufficient attention to anti-consumer practices by wireless carriers,” CWA pointed out.

A complaint filed by the labor federation Change to Win, updated in June 2017, called on the FCC to investigate T-Mobile US for “a pattern of fraudulent enrollment practices that result in unanticipated charges for customers.” The request was based on extensive research into T-Mobile sales practices as well as interviews with T-Mobile sales representatives. The Commission has not acted on this request.

“These kinds of employer sales and compensation policies that incent unethical sales practices are particularly acute at call centers operated by vendors under contract with communications companies and the authorized retail stores operated by independent owners selling the telecommunications carriers’ brand. The employees working at contract call centers or authorized dealers typically earn significantly lower pay than corporate employees,” CWA said. The FCC has determined that carriers are responsible for the conduct of third parties acting on their behalf. That rule should be reinforced across the industry, the filing noted.

It is clear that Commission action is needed to protect customers from cramming. That means strong rules that apply to all voice service providers, including traditional landline, wireless and interconnected VoIP providers, CWA concluded, calling on the Commission to take these steps:               

1. Convene a workshop to gather information on the impact of telecommunications companies’ sales policies and performance management practices on cramming and slamming of unauthorized charges on customers’ bills. The workshop should include representatives of frontline sales and service employees and telecommunications companies. The Commission must ensure strong whistleblower protections for frontline sales and service employees.

2. Issue a report on its findings, with the goal of determining the best way to relieve the pressures caused by unrealistic quotas, to the benefit of workers and consumers.

3. Respond to the Change to Win request for an investigation of T-Mobile and its alleged unfair practices towards customers, including fraudulent enrollment practices.

4. Require that voice carriers receive a customer’s express consent -- documented in writing -- before adding any charges to a customer’s account, and adopt procedures to allow consumers to block all third-party charges.

 

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CWA represents 700,000 working men and women in telecommunications, customer service, media, airlines, public service and manufacturing.

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