Small Firms Are Latest Victims of Phone Switching
Slamming, the illegal switching of long-distance phone service, has found a new target: small business.
Nearly double the number of small businesses have been victimized since increased protections for residential customers went into effect in January.
Slamming complaints from business customers increased from 15% of total complaints last year to 28% this year, Pacific Bell reports.
In June alone, more than 6,500 businesses filed complaints with Pac Bell, the state’s largest phone company, compared with just less than 3,000 business complaints in the same period last year.
“It’s definitely a trend in the business community and a growing problem,” said Steven Allen, a Pacific Bell spokesman.
The increase has come at a time when residential customers, especially those in the Latino and Asian communities, are reporting fewer illegal switches. The state Public Utilities Commission estimates that 12,000 phone customers are switched on average each month, compared with 25,000 a month last year.
Small businesses are being taken advantage of not only by unscrupulous long-distance resellers, but also by merchandisers of Web sites, phone cards and other services are zeroing in on small firms.
The problem has attracted the attention of the California Small Business Assn., or CSBA, which believes that small companies will also be targets of “shocking,” unauthorized switching of electric service, when deregulation of that utility goes into effect in January.
To combat the problems, the association has created the National Small Business Coalition on Utility Regulation. It works at both the state and federal levels to focus more attention on the plight of small-business owners, like Eileen Fend.
Owner since 1978 of Interim Personnel Inc. in Manhattan Beach, Fend was surprised when her March telephone bill showed her long-distance carrier had been switched.
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She tried to contact the new long-distance carrier for five months. But she could never get past voicemail, and her messages to them went unanswered. Finally, after she stopped paying the bill, the company contacted her.
They promptly switched her back to her original carrier, but the change left her fax line inoperable for three days.
“I was so upset,” Fend said. “It’s not upfront and forward, and I believe in doing business upfront and forward.”
Fend, who will soon take over as head of the CSBA, prides herself on her business savvy and believes the company must have used deceptive practices. Fend said she didn’t recall ever giving approval for the change, even though the reseller insisted it received her approval.
“If I fell for it, I’m sure other people are falling for it,” Fend said.
Harold Igdaloff, owner of 29-year-old Sungro Chemicals Inc. in Los Angeles, had four problems with long-distance resellers and phone service sellers this year alone: an unauthorized fee for service that appeared on his phone bill, a “free” trial subscription to a government bidding list that turned into a $60 collect fax bill, a long-distance reseller who quoted one rate and charged another, and an unasked-for Web site.
“They faxed us a copy of the Web site, and it had our name misspelled, it had us selling to agriculture, and we sell to industrial, and it had the wrong hours of operation,” Igdaloff said.
Igdaloff cut off the unwanted services after a long battle with some of the companies involved but said it cost him hours that he could have spent tending to his 12-employee business.
“Small businesses’ most valuable asset is time,” Igdaloff said. “That’s the thing we have the least of.”
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Ironically, it is increased protections and enforcement that may have forced unscrupulous resellers and phone service marketers to target the business community, said Carl Oshiro, a San Francisco attorney who represents CSBA.
The rule that went into effect in January requires that long-distance service changes by residential customers be verified by an independent third party. Typically, the resellers hire a company that does not profit from the deal to contact customers and make sure they understand and agree to the switch.
No such requirement is in place for businesses, however, Oshiro said.
Moreover, small businesses, with their higher volume of long-distance calls, are a more lucrative target than residential customers. In addition, small businesses are vulnerable because illegal authorization can often be unwittingly obtained from a clerk, secretary or other employee without the owner’s knowledge, Oshiro said.
Because the PUC and Federal Communications Commission are now receiving testimony on problems and will come up with improved regulations, Oshiro recommends that small-business owners contact the PUC consumer affairs branch at (800) 649-7570 or the CSBA at (800) 350-CSBA.
Sandy McGreevy, Pacific Bell’s regulatory manager, provides these tips:
* Talk with employees about phone-switching scams.
* Warn them against using their business telephone number on sweepstakes or raffle drawings. By entering, they may be authorizing a switch.
* Choose one person to be the sole contact for all the company’s telecommunications decisions.
* Never give information about the phone account over the telephone, and ask for all service offers in writing.
* Never sign anything without reading the fine print.
* Read the bill carefully every month to ensure that service is being provided by your preferred carrier.
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Times staff writer Vicki Torres can be reached by e-mail at vicki.torres@latimes.com or by fax at (213) 237-7837.
