State Regulators Target Qwest in Sales Practice Probe

State regulators have launched an investigation into sales practices at Qwest Communications, a phone company that has provoked tens of thousands of complaints from Californians who say they were billed for services they didn’t order or had their long-distance service switched without their permission.

The probe by the California Public Utilities Commission comes as state officials move to step up enforcement of telecommunications fraud. In July, the PUC joined with the state Attorney General’s Office in a lawsuit accusing WorldCom’s MCI unit of slamming, the illegal practice of changing a customer’s long-distance company without permission.

Denver-based Qwest is being investigated for slamming and cramming--the two most common forms of phone fraud. Cramming is adding charges to customer phone bills for products or services they did not order or that were never provided.

Qwest spokesman Matt Barkett declined to comment on the specifics of the California probe, but he said the company has adopted a series of anti-slamming measures to reduce violations at the telemarketing agencies that sell Qwest services.

Slamming and cramming “are not the kind of business practices that we condone in any way,” Barkett said. “Slamming is a very serious issue, and we hire agencies who take it seriously. In the past year, we have terminated more than 25 agencies for slamming.”

State regulators said they began focusing on Qwest earlier this year after hearing from consumers at public meetings and reviewing a surge in complaints against the company. The PUC said it received more than 40,000 complaints against Qwest from January through March of this year.

Local phone company Pacific Bell, which handles the billing for Qwest and other long-distance carriers, also logged more than 6,000 cramming complaints involving Qwest in 20 months in 1999 and 2000.

The most common complaint involved unauthorized billings for Qwest’s $7.95-per-month Q.Home plan and its Q.World plan, which costs $3 per month. Most of the complaints came from customers who speak Spanish or an Asian language, the PUC said.

California’s investigation is the latest in a string of state actions targeting the company. Eight other states have sued Qwest for slamming violations, and the company paid $1.5 million in penalties to settle a federal slamming probe earlier this year.

In that case, federal regulators uncovered evidence that some customer consent forms contained forged signatures.

California regulators said in a statement late Tuesday that they are pursuing similar violations, such as using fraudulent documentation to verify customer consent for switching phone service. A preliminary review found that Qwest used forged customer signatures and audio tapes that sometimes contained inaudible conversations or recordings of strangers agreeing to switch a consumer’s long-distance service, officials said.

Long-distance companies are required to verify--through an independent agency--written consent forms or recordings of telemarketing calls, that a customer has indeed agreed to switch their service to a different carrier.

The need for solid verification has cropped up amid intense competition among long-distance companies vying for residential and business customers. As the pressure to book sales has increased, so has the number of incidents of companies stealing customers from one another.

As part of the investigation into Qwest’s conduct, California regulators will conduct evidentiary hearings in the coming months.