Settle suits over ads, 'slamming'


December 13, 1990|By Leslie Cauley

American Telephone & Telegraph Co. said yesterday that it has reached an out-of-court settlement in its lawsuit against MCI Communications Corp. that accused MCI of "slamming" -- signing up customers for long-distance services without their consent or knowledge -- to win customers away from AT&T.

A second lawsuit against MCI and a counter-suit against AT&T for using what both companies described as questionable advertising practices also were settled, both companies said.

Terms of the settlements were not disclosed. Each company had asked for unspecified damages.

"We are pleased that this period of difficulty in the industry has passed," said Herb Linnen, an AT&T spokesman.

In its suit filed in January, AT&T accused MCI of using false and deceptive telemarketing practices to woo away AT&T customers. Those practices, AT&T alleged, included gambits such as telling prospective customers that AT&T was going out of business or no longer provided long-distance services.

Those claims were immediately denied by MCI. The No. ......TC long-distance company promptly accused AT&T of engaging in similar activities to build its market share, which has been slipping steadily since the breakup of the phone company six years ago.

The argument between the two telecommunications companies succeeded in grabbing the attention of regulators and lawmakers in Washington, culminating in a public hearing about slamming on Capitol Hill in October.

Yesterday, both companies said they have agreed to propose adoption by the Federal Communications Commission of mandatory telemarketing standards to prevent consumers from being switched to a long-distance carrier without authorization.

Those standards would permit long-distance carriers to confirm that a customer has agreed to switch to another carrier by one of four ways: by a customer-initiated call to a toll-free number; by independent confirmation by a third party; by a signed letter of authorization; or by a call placed by the customer to his local phone company or long-distance carrier.

A similar proposal calling for the standardization of telemarketing practices was submitted to the FCC by US Sprint in March.

AT&T's advertising lawsuit, filed in October 1989, included charges that MCI was providing misleading information in its ads. The suitwas AT&T's response to an earlier suit by MCI that accused AT&T of using similar tactics in its advertisements.

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