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Houston-based Total World Telecommunications Inc. has spent millions of dollars to settle lawsuits or avoid legal action in six states that have accused the firm's agents of switching customers' long-distance service without their permission.
Total World claims that federal law does not prohibit the type of marketing that was being used by some of its resellers or their agents, but because 23 states are prosecuting such cases under consumer protection laws, the company has stopped the activity altogether.
In the practice known as "slamming," customers were switched through a "box promotion" or "sweepstakes" in which they thought they were signing up to win a free gift, but in reality, their long-distance service was being switched.
Donald Booth, Total World Telecom's president and chief executive officer, says the firm has spent between $7 million and $8 million to take care of its slamming-related problems. The company is paying penalties …