BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
Order Instituting Investigation on the Commission's Own Motion into the Billing Practices and Conduct of Legacy Long Distance International, Inc. (Legacy) to Determine if Legacy Violated the Law, Rules, and Regulations Governing the Manner in which California Consumers are Billed for Phone Services. |
FILED PUBLIC UTILITIES COMMISION JUNE 24, 2010 SAN FRANCISCO, CALIFORNIA I. 10-06-013 |
ORDER INSTITUTING INVESTIGATION
NOTICE OF HEARING
AND ORDER TO SHOW CAUSE
TABLE OF CONTENTS
I. INTRODUCTION 1
II. BACKGROUND 2
A. Legacy and Its Operations 2
B. CPSD'S Protest Of Legacy's Application For Expanded Authority Lead To The Discovery Of Cramming Complaints 3
1. Consumer Complaints Filed with Billing Aggregator BSG 4
2. Consumer Complaints Filed with the Commission's CAB 4
III. CPSD'S CURRENT INVESTIGATION 5
A. The Scope 5
B. The Conclusions 7
1. Legacy Placed Unauthorized Charges on Consumers' Telephone Bills 7
a. Legacy Billed For Collect Calls That Did Not Occur 7
b. Legacy Billed For Unauthorized Third-Party Calls 8
c. Legacy Billed For Calls That Did Not Connect Well 8
d. Legacy Billed For Rejected Collect Calls 9
e. Legacy Billed For Collect Calls Left On Answering Machines 9
2. Legacy Failed to Disclose Rate Information to its Customers 10
3. Legacy Failed to File its Complete Tariff Timely 10
4. Legacy Charged Consumer Rates in Excess of Its Filed Tariffs 11
5. Legacy Failed to Disclose Numerous Regulatory Sanctions Received in 16 Other States 11
III. AN OII IS NECESSARY TO ADDRESS LEGACY'S VIOLATIONS OF THE LAW 12
A. Justification for Use of the OII Process 12
B. The CPSD Report Suggests that Legacy Violated PUC Section 2890(a) By Placing Unauthorized Charges on Consumers' Telephone Bills 14
1. The Law 14
2. Application of the Law to the Factual Allegations 17
C. The CPSD Report Suggests that Legacy Violated PUC Section 2896(a), Section 451, and the Federal Telecommunications Act Section 226 by Failing to Disclose Rate Information to its Consumers 18
1. The Law 18
a. PUC Section 2896(a) 18
b. P.U. Code Section 451 19
c. FTA Section 226 20
2. Application of the law to the Factual Allegations 20
D. The CPSD Report Suggests that Legacy Violated PUC Section 489(a) By Failing to File its Complete Tariff Timely 21
1. The Law 21
2. Application of the law to the Factual Allegations 22
E. The CPSD Report Suggests that Legacy Violated PUC Section 532 by Charging Consumers Rates in Excess of its Filed Tariffs 22
1. The Law 22
2. Application of the Law to the Factual Allegations 23
F. The CPSD Report Suggests that Legacy Violated The Commission's Rule 1.1 By Failing To Disclose Numerous Regulatory Sanctions It Sustained In 16 Other States 23
1. The Law 23
2. Application of the Law to the Factual Allegations 24
IV. SCOPE OF THE COMMISSION'S INVESTIGATION 24
A. The OII 24
B. Penalty/Refund Analysis 25
1. Penalties 25
a. Severity of the Offense 25
b. Conduct of the Utility 25
c. Financial Resources of the Utility 25
d. Totality of the Circumstances in Furtherance of the Public Interest 26
e. The Role of Precedent 26
2. Refunds 26
ATTACHMENT A - Witness Identification for Depositions
ATTACHMENT B - Staff Report
I. INTRODUCTION
By this Order, the Commission institutes a formal investigation to determine whether Legacy Long Distance International, Inc. (Legacy) violated any of the following provisions of the Public Utilities (P.U.) Code, general orders, other rules, or requirements in the following manner:
· P.U. Code Section 2890(a) by placing unauthorized charges on consumers' telephone bills (also known as "cramming").1 The unauthorized charges took the following form:
o Charges for collect calls that did not occur;
o Charges for unauthorized third-party calls;
o Charges for calls that did not connect well;
o Charges for rejected collect calls;
o Charges for collect calls left on answering machines.
· P.U. Code Sections 2896(a) and 451, as well as the Federal Telecommunications Act of 1996, Section 226, by failing to provide consumers with sufficient rate information with which to make informed choices on whether to accept certain collect calls or not.
· P.U. Code Section 489(a) by failing to file its complete tariff timely, and by charging consumers under rates it had not filed.
· P.U. Code Section 532 by charging consumers in excess of rates posted in rate sheets; and
· Rule 1.1 of the Commission's Rules of Practice and Procedure by failing to disclose numerous regulatory sanctions Legacy sustained in 16 other states.
The Order provides notice that a hearing will be held on the matter, and directs Legacy to show cause as to why the Commission should not find violations in this matter, and why the Commission should not imposes penalties, and or any other forms of relief, if any violations are found.
Finally, the Order also directs Legacy to respond to certain questions and to provide the Consumer Protection and Safety Division (CPSD) with certain information, described infra.
1 The term "cramming" comes from the Legislative history of P.U.Code sections 2889.9 and 2890: "This bill addresses the problem of `cramming,' a practice in which consumers are charged for unauthorized services on their phone bills...Often the charges which are `crammed' on the customer's bill are relatively small, less than $10, and inconspicuously labeled. If one does not carefully scrutinize the telephone bill, the crammed charge could easily be overlooked." (Assembly Bill No. 2142, 3d reading May 7, 1998, Assembly Floor (1997-1998 Reg. Sess.); see also Sen. Bill No. 378, approved by Governor, Sept, 30, 1998 (Amend. Aug. 21, 1998) [" `Cramming' charges are usually comprised of services such as unauthorized voice mail options, Internet access options, calling cards, paging services, and 800 numbers."] (1997-1998 Reg. Sess.); Final Opinion on Rules Designed to Deter Slamming, Cramming, and Sliding, Decision No. 00-03-020; R. 97-08-001; I. 97-08-002 [2000 Cal. PUC LEXIS 215], at p. 5 March 2, 2000 ["Assembly Bill 2142 (Stats. 1998, Ch. 1036) and SB 378 (Stats. 1998, Ch. 1041) add sections 2889.9 and 2890, respectively. These bills, which the legislation instructs are to be read together, were passed to deter cramming and to clarify the rights and remedies available to California consumers with regard to telephone billing disputes."].)
