PUC Orders Pacific Bell to Change Marketing Policies

Citing Pacific Bell for an “overzealous sales policy,” the California Public Utilities Commission ordered changes Wednesday in telephone marketing practices, including a ban on unsolicited calls to sell new optional services.

The commission put off action for at least a month on Pacific Bell’s proposal to pay refunds to customers for services that they bought after Jan. 1, 1985, and now say they never wanted.

Also deferred, probably until late this year, was a proposal by the PUC’s consumer staff to cut Pacific Bell’s rates by $49.5 million as a penalty for alleged deliberate violations of state rules on marketing of phone services.

The staff, in an undercover investigation, reported that Pacific Bell sales representatives commonly quoted “basic” prices to new customers that included expensive optional features, failed to itemize charges, used high-pressure sales tactics, charged deposits to customers eligible for exemptions and failed to disclose low-cost options to low-income customers.

As a result, the staff said, some customers reported that they were being billed for services that they hadn’t ordered, and a larger number said they were paying for unneeded services because they didn’t know that lower-priced options were available.

“The abuses uncovered by our staff were not isolated (but were) part of an overzealous sales policy which has been companywide,” PUC President Donald Vial said Wednesday.

Pacific Bell blames the problems on confusion and revenue needs following the breakup of the nationwide Bell System and says it is retraining its staff and changing its practices voluntarily. But the PUC voted unanimously to forbid a variety of sales practices, not all of which are included in the company’s voluntary reforms.

The major addition was a ban on “cold selling,” in which customers are given unsolicited calls and told that a review of their records shows a need for additional services. The PUC report found that the practice was widely used and was a frequent source of complaints.