Qwest Pays Fine for California Violations
Qwest Communications International Inc. paid a record $20.3-million fine for illegally switching thousands of California customers’ long-distance phone service and putting unauthorized charges on their telephone bills, state regulators said Thursday.
The fine is the highest ever paid by a telecommunications firm for practices known as slamming and cramming. The sanction represents a record for the number of violations -- 4,871 instances of illegal switching and 3,581 of unauthorized charges during 1999 and 2000.
SBC Communications Inc.'s Pacific Bell unit was hit with a higher fine from the California Public Utilities Commission, but that $25.55-million levy two years ago was for other marketing abuses and deceptive practices.
“There are consequences that are significant for violating our rules and abusing our consumers,” said Commissioner Carl W. Wood, who oversaw the Qwest case.
Qwest, struggling amid accounting scandals and the downturn hitting all telecommunications companies, paid the fine Tuesday but is seeking to overturn the order in the state Court of Appeal in San Francisco.
The Denver company, a regional Bell offering local phone service in 14 Western states, sells only long-distance service in California.
The PUC said many of the violations occurred in Latino and Asian neighborhoods where language barriers could have been a factor used to a salesperson’s advantage.
Qwest contends that the commission has only enough evidence to support 106 instances of slamming and five cases of cramming in the two-year period. A company spokesman said Thursday that Qwest has “zero” tolerance for such practices, always requires third-party verification for its California sales and now has a “state-of-the-art” process to protect against slamming and cramming.
Wood said the state agency “noted they had improved significantly after the PUC began investigating.”
“I believe they are not continuing to do this at the level they were doing it. It seems there is always some level of this going on because it’s probably impossible to have perfect oversight.”
The problem is that salespeople are on commission, “so there’s a big incentive for them to do this,” Wood said, adding that Qwest must institute internal procedures to prevent slamming and cramming.
In Qwest’s case, some salespeople turned in names of new customers when they had not agreed to switch their long-distance service. And for both real customers and those slammed, salespeople added features such as call-waiting that the customer didn’t order.
The PUC said the cramming violations involved both billing for features that were added without the customer’s knowledge or consent and billing for features that never were provided.
“Slamming violations peaked several years ago, but they still continue at a substantial enough rate that there is cause for concern,” Wood said.
Although the agency continues to monitor and informally probe slamming and cramming complaints, no formal investigation of the industry is pending in California, PUC spokeswoman Terrie D. Prosper said.
“Once you fine a company, the others tend to take notice that the commission is taking action on these unfair practices.”