III. LEGACY VIOLATED P.U. CODE §2890(a) BY PLACING UNAUTHORIZED CHARGES ON CONSUMERS' TELEPHONE BILLS

According to P.U Code §2890(a), a telephone bill may only contain charges for products or services, the purchase of which the subscriber has authorized. Staff talked with 91 complainants and reviewed their billing records and switch records. After completing this review, Staff identified 106 incidents of unauthorized charges (also known as "cramming") and 49 incidents of unreasonable charges and lack of rate disclosure.19 Based on the evidence gathered in the investigation, it appears Legacy violated §2890(a) by systematically placing unauthorized charges on its customers' telephone bills in a number of ways.

TABLE 520

CPSD's Analysis of the 91 Complainants to CAB against Legacy

2005 through 2008

Placement of Unauthorized Charges or Cramming

Number of Incidents21

Percent of Total

A. For collect calls that did not occur

60

57%

B. For unauthorized third-party billing

20

19%

C. For calls that did not connect well (inaudible/static)

11

10%

D. For rejected collect calls

9

8%

E. For collect calls connected to answering machines

6

6%

Total

106

100%

A large proportion (57%) of the sampled cramming incidents filed with CAB against Legacy concerned charges for collect calls that did not occur or for which records did not exist. Staff's careful examination of the available switch records of the subject calls and additional information from the carriers and complainants provided overwhelming evidence that these 60 collect calls were not placed, connected, or authorized, supporting the consumers' complaints of unauthorized charges. Placing charges on consumers' telephone bills for non-existent calls is not only "cramming;" it also suggests theft and/or fraud.

A subscriber's Local Exchange Carrier (LEC) provides the service necessary for a call to connect to and from the subscriber's telephone. A call must travel over the LEC's switch in order for it to connect to the consumer's telephone. If the LEC's switch records show that no call traveled over the LEC's switch to the billed consumer's telephone at the time and date of the purported call, then the call did not occur. Staff requested the switch records of the calls in question from Legacy and from the consumers' LECs (AT&T and Verizon). Staff compared Legacy's switch records to those provided by AT&T and Verizon.

In 25 of the 60 incidents in this complaint category, the carriers' switch records showed that the calls Legacy billed to the consumers never travelled over AT&T's or Verizon's switches, supporting the conclusion that these calls did not occur. In fact, in 12 out of the 25 instances, Staff uncovered a disturbing pattern of Legacy charging consumers for fictitious collect calls. Specifically, Legacy charged these consumers for a collect call, and one month later billed them for another collect call that allegedly happened exactly 1 hour and 11 minutes after the first call.

For example, Legacy charged Complainant #6009210 in her January 2006 bill for a collect call that was left on her answering machine on December 20, 2005 at 7:03 p.m.22 One month later, she was billed for another collect call allegedly accepted on December 20, 2005, at 8:14 p.m., exactly 1 hour and 11 minutes after the call on her prior month's bill. AT&T reviewed its historical call record and phone number inventory and found no record of the originating telephone number of the second call being in existence at the time of the second collect call. In addition, AT&T's switch records show no evidence that the second call ever passed over its network. Therefore, the second call for which Legacy billed the consumer never occurred.

Complainant #8059447, an attorney in Los Angeles, was billed by Legacy for a collect call placed on August 9, 2008 at 1:29 p.m. Neither she nor any member of her household made or accepted this call. She stated that on or about August 9, she recalled answering the phone and hearing a recorded voice stating "You have a collect call from" followed by a pause for name. "However, no name was given," she wrote. "I believe I said `What?' and the recorded message repeated at least once."23 She hung up the phone, and when she received her August phone bill, she noticed a charge for a 6-minute collect call from Legacy. One month later, she received her September bill, with another collect call from Legacy. This second collect call began at 2:40 p.m., according to her bill, exactly 1 hour and 11 minutes after the first collect call. Legacy provided CPSD with the billing records for the calls. Reviewing its own switch record of the call, Legacy found no record of the second collect call. AT&T also found no record of the second call. Therefore, the second call for which Legacy billed the consumer never occurred.

In 22 of the 60 incidents in this complaint category, the carriers or Legacy were able to produce call records that suggest phone connection of some duration. The average duration of the connection time for 71% of the 22 calls is 21 seconds. When viewed in the context of the consumers' assertions that they did not take these collect calls, the relatively short call duration suggests that it is unlikely that conversations occurred. These 22 complainants are convinced these calls did not occur and they provide supporting facts in their complaints, such as: not knowing anyone from the originating number; collect calls supposedly accepted after business hours when no one is at the premises; collect calls allegedly accepted by someone at a residence when no one is at home; etc. See Appendix 13 for the complete table of complaint descriptions. Staff is persuaded by the complainants' claims that these collect calls did not occur.

In the remaining 13 of the 60 incidents, the carrier and/or Legacy were unable to provide any switch records at all. Under P. U. Code § 2890 (d)(2) D, in the case of a dispute, there is a rebuttable presumption that an unverified charge for a product or service was not authorized by the subscriber, and that the subscriber is not responsible for the charge. Therefore, in the absence of any call records that could point to the contrary, Staff has to place substantial weight on the consumers' assertions that these calls did not occur and were not authorized.

The weight of the evidence supports the complainants' contentions in these 60 instances that Legacy charged them for collect calls that did not occur, and that Legacy violated P.U Code §2890(a) by placing unauthorized charges for non-existent calls on its customers' phone bills.

Unlike a collect call, wherein the receiving party authorizes the charge for the collect call, a third party call is any call for which the charges are billed to a third number, other than the call originating number or the call destination number. In order to bill for a third party call, a telephone provider must first obtain the authorization of the party to be billed. Nineteen percent of the cramming complaints sampled by Staff relate to unauthorized third party billings. In one case, the consumer disputes Legacy's charges for third party billing because he did not accept the charges and was in fact out of the country at the time of the alleged calls.24 In another instance, the consumer stated that the third party call was billed to her dedicated fax line.25 Because this line was only used for the fax, no one could have accepted the third party charges. See Appendix 13 for a complete list of complaint descriptions.

The evidence supports the conclusion that Legacy billed consumers for third-party calls that the consumers did not authorize, in violation of P.U Code §2890(a).

Ten percent of the sampled cramming complaints relate to charges for calls that did not connect well, were inaudible, disconnected after 3 seconds, or connected to wrong numbers. For example, a consumer complained that the phone rang; she picked it up but heard no voice, and then heard a disconnecting sound. She hung up the phone. She was billed for the call.26

The switch records for the complaints in this category show an average call connection duration of 14 seconds. The short average duration appears to support the complainants' assertions that the collect calls did not connect well. In each of the instances, the complainant provides specific descriptions of the poor connection. See Appendix 13 for a complete list of complaint descriptions.

According to P.U Code §2890(a), a telephone bill may only contain charges for products or services, the purchase of which the subscriber has authorized. When authorizing a collect call, a consumer has a reasonable expectation of receiving a working call connection in exchange for the associated charges. In the above cases, where the consumers complained of the inability to conduct a phone conversation due to immediate disconnections or inaudibility, it is fair to say that the consumers did not receive the useable service from Legacy, the charges for which they authorized. Instead, Legacy billed them for a useless service, the purchase of which the subscriber did not authorize.

As mentioned above, P.U Code §2890(a) provides that a consumer's phone bill may only contain charges authorized by the consumer. The Federal Telecommunications Act of 1996, Section 226(b)(1)(B), require that providers of operator services permit the consumer to terminate the telephone call at no charge before the call is connected. Legacy's own policy requires that a collect call must first be accepted by the recipient before billing can begin27. Yet 8% of the sampled cramming complaints relate to Legacy charging consumers for collect calls they rejected.

For example, Complainant #6049227 stated that Legacy billed him for collect calls that were specifically rejected. He stated, "[w]hen the phone rang, my wife answered the phone in the presence of our whole family. An automated voice came on to indicate that a collect call was trying to get through and gave her an option to accept the call or reject the call. My wife did not accept the call, and hung up. Nevertheless, my September bill showed a $32.83 charge for the call."28 Upon complaining, the consumer was told by a Legacy customer service representative that Legacy's automated system recorded someone at his residence pressing "1" to accept the collect call, and that the call lasted 1 minute and 23 seconds and that there was a five-minute minimum charge. The complainant refutes Legacy's claim and insists that his wife specifically rejected this collect call.

The other complainants in this category had similar accounts of being charged for collect calls they specifically rejected. Legacy clearly placed unauthorized charges for rejected collect calls on consumers' phone bills, in violation of P.U Code §2890(a).

Six percent of the sampled cramming incidents concerned charges for collect calls that were left on the consumers' answering machines. When collect calls are left on answering machines, the recipient of the call does not have the opportunity to accept or reject the call. Thus, Legacy's billing for collect calls left on answering machines is a clear case of "cramming." In its response to CPSD's data request 4-3 Legacy stated that "Legacy does not bill for collect or third party calls that are answered by answering machines or voice mail"29 and that "Collect calls can only be considered accepted by the automated call processor when a DTMF signal of `1' is received by the Dialogic card."30 Legacy further claims that, "No collect calls are released to answering machines or computer modems."31 But consumer complaints directly contradict Legacy's assertions.

Complainant #6009210 attests in her declaration that she was charged for 3 collect calls left on her answering machine while she and her husband were in Mexico.32 Complainant #6012509 also refutes Legacy's claim, stating that his answering machine recorded the telephone number of a collect call originating in Washington State.33 Complainant #6008334 asserts that she was charged for a collect call that was answered by an answering machine.34 These complaints clearly refute Legacy's assertions that it does not bill for unauthorized collect calls left on answering machines.

19 See Part IV for discussion of lack of rate disclosure.

20 Refer to Appendix 13 for the expanded table containing the description of complaints.

21 Some of the 91 complainants raised multiple complaints.

22 Appendix 14, Declaration of Complainant #6009210

23 Appendix 15, Declaration of Complainant #8059447

24 Appendix 16, Declaration of Consumer #7034155.

25 Appendix 17, Declaration of Consumer #6021282.

26 Appendix 18, Declaration of Consumer #6008334.

27 Appendix 19, Legacy's response to Data Request 3.3.

28 Appendix 20, Declaration of Complainant #6049227.

29 Appendix 21, Legacy Response to Data Request 4-3.

30 Ibid.

31 Appendix 22, Legacy Response to Data Request 1-9, Billing/Collections Department Customer Service Guidelines, Collect Call Disputes, Number 3, filed under seal.

32 Appendix 23, Declaration of Complainant #6009210.

33 Appendix 24, Declaration of Complainant #6012509

34 Appendix 25, Declaration of Complainant #6008334

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