Fraud Suspected in Phone Bills to 39,000 in Valley

The California Public Utilities Commission and the Los Angeles city attorney’s office are investigating a Texas company for allegedly fraudulently billing up to 39,000 customers in the San Fernando Valley for long-distance telephone service.

In August, September and October, consumers started receiving $8 to $9 monthly service charges on their bills from FTC Long Distance in Dallas.

But the PUC, GTE California and other companies were swamped with calls from angry customers saying they had never heard of FTC and had not switched their long-distance service to the obscure company.

Larry McNeely, of the PUC’s safety and enforcement division, said: “We believe that a service charge was inappropriately assessed [by FTC] to about 35,000 to 39,000 customers” in the 818 area code. “We have been deluged with calls.”

McNeely hopes to present the case to PUC commissioners soon and said he expects consumers to get complete refunds.

Because of the ongoing deregulation of the phone industry, many companies besides AT&T;, MCI and Sprint now offer long-distance service.

Charges for long-distance calls are routinely included in monthly bills sent out by local telephone companies, in this case GTE California, which manages 773,000 phone lines in parts of the 818 area code from Chatsworth to Tujunga.

Consumers send their payments to GTE, which then parcels the funds out to various billing agents representing the more obscure long-distance carriers.

“One of the complications of the current era is that the phone business has opened up to everybody,” said GTE spokesman Larry Cox. “And there will be some equitable companies and, unfortunately, some companies that don’t aspire to the same high standards that we do.”

To safeguard against billing errors in the future, GTE will stop doing business with bill clearinghouses that work for companies found to be disreputable, Cox said.

FTC, which has been in business since 1993, has been the target of consumer complaints in Texas for two years for unauthorized switching of long-distance service, according to the Better Business Bureau in Dallas.

“We just revoked their membership last month because of a pattern of complaints,” said the BBB’s Diana Prickett.

When Prickett’s office started getting complaints, FTC told them it was too expensive to send out verification letters to new customers. “I don’t know if it was a scam from the get-go or just an idea that went bad,” Prickett added.

Manuel Zepeda, president of FTC, did not return calls seeking comment.

FTC, which is licensed as a phone company in California, apparently contacted National Business Exchange in Pasadena to handle its billing chores.

National Business Exchange then sent the billing business to another local company, OAN Services in Van Nuys, which handles bills for more than 300 companies.

OAN in turn sent GTE billing information, based on information that FTC provided, and GTE then posted the FTC charges in its monthly billing statements.

But OAN dropped FTC as a client in late September.

“We got hundreds of complaint calls,” said Ron Evans, OAN’s chief operating officer.

OAN sent an official to Texas to meet with FTC. But OAN never got a satisfactory answer about what was causing the billing errors from FTC, Evans said.

One of the many victims in the FTC case is Bart Reed of Sylmar. Reed has several phone lines, and when he opened his August phone bill he saw two $9 monthly service charges from FTC. “I said, ‘What the heck is that?’ ”

So started an intense game of phone tag as Reed called GTE and eventually spent most of a day calling Texas before he reached someone at FTC. The FTC customer-service rep told him this was due to a computer error.

Since then, OAN has said that it would issue a credit to him next month for the first of his bogus FTC bills, Reed said.

Most consumer complaints about unauthorized long-distance charges involve a sudden list of individual calls popping up under the marquee of a new phone company. But in the FTC case, thousands of customers were hit with the mysterious monthly service fees, rather than charges for calls.

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How to Handle Bogus Phone Bills

Monthly phone bills in the 818 area code are sent out either by Pacific Bell or GTE California, and these bills are becoming more complex because of the ongoing deregulation of the phone business.

Although AT&T;, MCI and Sprint control about 92% of the long-distance market, consumers have a choice of dozens of long-distance companies.

If your monthly statement lists a strange charge for a phone company you have never heard of, call your local phone company and ask them to explain it.

Pac Bell and GTE deal with many billing firms that do the record-keeping for the more obscure long-distance companies, and they can give you a contact number for a local billing office.

If the long-distance billing office won’t credit a particular bill, then it’s always a good idea to put your complaint to them in writing.

The state Public Utilities Commission, which licenses long-distance companies in California, also has a consumer complaint line: (800) 649-7570.