The marketing firm that propelled Redskins owner Daniel M. Snyder to wealth and local telephone giant Verizon Communications jointly paid $3.1 million this week to Florida authorities to settle claims that they improperly switched customers' long-distance service.
The payment is among the largest ever surrendered to resolve complaints about the practice known as slamming -- transferring a customer to another long-distance company without authorization. Last June, WorldCom Inc., the nation's second-largest long-distance company, paid the Federal Communications Commission the largest slamming fine in history -- $3.5 million.
A Verizon spokeswoman, Briana Gowing, noted that the actions occurred three years ago -- well before Verizon owned the company accused of the misdeeds, GTE Corp. Regional giant Bell Atlantic bought GTE last year, creating Verizon. GTE hired Snyder Communications to market its long-distance service in Florida and across the country in 1997. Once GTE discovered Snyder Communication's "overzealous sales practices," it terminated the marketing arrangement, she said.
Neither company admitted wrongdoing as part of the settlement.
Snyder sold his company to a French firm, Havas Advertising, last year for $2.1 billion and did not participate in settlement negotiations. But Snyder was the chief executive of Snyder Communications during the time of the alleged slamming. He declined to speak for the record.
According to his spokesman, Karl Swanson, Snyder did not know that employees at his marketing company were breaking the rules. Once the company discovered the practices, it fired the employees, Swanson said.
"We operate at high integrity," Swanson said. "The company had over 12,000 people in 77 offices offices all over the world and over $1 billion in annual revenue. Clearly, the chief executive doesn't know what everyone's doing on any given day."
A spokeswoman for Paris-based Havas, Jennifer Gery, said that when the company bought Snyder Communications, "it inherited responsibility for these incidents, all of which did occur well before Havas's purchase."
In an age of relentless marketing, where dinner-time interruptions are routine and bills can be mind-numbingly complex, slamming is a practice that prompts considerable outrage from its victims.
"It's a visceral reaction," said Mark Cooper, research director of the Consumer Federation of America. " 'How could you do that to me? If I didn't ask for it, you shouldn't be able to ram it down my throat.' The notion that they can change your bill or change your service without your permission affronts the most fundamental principle of consumer sovereignty."
Snyder has earned a reputation as a fierce promoter of his business interests. Since his investment group purchased the Redskins in 1999 for $800 million, he has raised eyebrows in transforming football games into intensely commercial experiences.
Squeezing extra profit out of the product was a skill Snyder refined at the marketing firm he launched a dozen years ago, from the ashes of a failed bid to sell college magazines. Bethesda-based Snyder Communications in 1997 landed the contract from GTE to market its long-distance telephone service nationwide on a variety of fronts, including through telemarketing.
The Florida attorney general, who pursued the case on behalf of consumers, alleged that Snyder Communications then hijacked customers on a grand scale.
"Our investigation revealed thousands of instances in which the marketing agent's representatives forged customers' signatures to switch them to GTE long-distance," said Florida Attorney General Bob Butterworth in a written statement.
Florida authorities also alleged that GTE employees at "Phone Marts" -- small shops in malls -- tricked customers into signing authorization forms. "They would be given a piece of paper that was supposedly a receipt for making a payment, but it was really an authorization to switch," said Deputy Attorney General Les Garringer, who heads Florida's economic crimes division in Tallahassee.
Verizon, which fully cooperated with the investigation, said all of the objectionable practices have long been fixed. "Since Verizon began offering long-distance, our practices on slamming are squeaky-clean," said a spokesman, Eric Rabe.
Under the terms of the settlement, Verizon and Snyder Communications together paid $2.5 million and Verizon alone paid an additional $600,000 to cover the actions of the Phone Mart workers. The money will go toward consumer protection programs.