PUC Puts Pacific Bell’s Selling Tactics on Hold

State regulators ordered Pacific Bell on Wednesday to change its marketing approach in light of “numerous consumer complaints” of sales tactics aimed at inflating monthly phone bills.

The Public Utilities Commission acted after its public staff division, which represents consumers, issued a report highly critical of Pacific Bell. The report estimated that 38% of the company’s customers in Southern California are paying for telephone features that they would like to drop. Statewide, the report concluded, 25% of the customers are paying for unwanted services.

The report also recommended a penalty of a $49.5-million rate cut, or three times the revenue needed to pay the salaries of the company’s marketing managers. No action will be taken on the recommendation until the commission decides a pending Pacific Bell rate case later this year.

“We cannot permit the public’s confidence in Pacific, as a provider of monopoly services, to be undermined by sales practices,” PUC President Donald Vial said. “If the allegations are true, they are not only serious tariff violations, they amount to a breach of public trust.”

Wednesday’s order cited the following sales problems:

- Failure to fully itemize all monthly and one-time charges for residential service.

- Failure to waive a deposit for connecting customers eligible for low-income Lifeline service.

- Collecting deposits from residential customers who, under Pacific’s rate schedule, are not required to make them.

- Adding services and charges to the bills of residential customers without their authorization.

The PUC scheduled an unusual one-day hearing on the order for May 16 at commission headquarters in San Francisco.

Pacific Bell spokesman Larry Mobbs said the company welcomes the opportunity to explain its sales practices “on the record,” and outlined some of the steps it has taken since the staff report was issued in an effort to reduce customer complaints.

These steps include instructing sales people to describe the various levels of basic phone service available and their respective costs, including Lifeline, and identifying as optional features such extras as “call waiting” signals and “call forwarding” service.

It now provides written confirmation of orders, if customers wish, including itemization of costs. Management also is devising a means of rating sales personnel in terms of longer-term customer satisfaction rather than orders placed.

“Basically, our goal is to make sure that our customers get what they want and need,” Mobbs said.