I. SUMMARY
The Utility Enforcement Branch (UEB) of the California Public Utilities Commission's (Commission) Consumer Protection and Safety Division (CPSD or "Staff") initiated an investigation into the operations and practices of Americatel Corporation (Americatel) in September 2006. This investigation was in response to a significant increase in cramming allegations reported by its billing aggregator, ILD Telecommunications, Inc. (ILD).1 ILD later clarified that loyalty or promotional credits to Americatel's subscribers were inadvertently reported as cramming. This explanation, in conjunction with the then declining complaint levels, led Staff to temporarily close the investigation in June 2007. The complaints, however, resumed and consequently Staff reopened the investigation in November 2007. Complaint levels against Americatel skyrocketed in the middle of 2008. Results of Staff's investigation into Americatel support the following conclusions:
1. Americatel crammed 360,504 California consumers and billed them for services they neither ordered nor authorized in violation of Public Utilities (P.U.) Code §2890(a) and §451;
· Americatel crammed 61,097 California customers because its marketing vendor, Bravo Marking, Inc., forged certain Letters of Authorization and fraudulently signed up customers for long distance telephone service.2. In addition, Americatel billed consumers even after they requested the cancellation of the long distance telephone service they neither ordered nor authorized;
· Americatel admitted to overcharging approximately 300,000 California consumers by applying the Universal Service Fund (USF) rate at 100%--instead of the 11.4% approved by the Federal Communications Commission (FCC) -- and applying erroneous, higher per minute plan rates; 3
2. Americatel refunded $1.5 million to California customers impacted by the fraudulent Bravo-related sales;4
3. Americatel refunded $2 million to California customers impacted by the overcharging of USF fee and rates;5 and,
4. Americatel failed to perform due diligence in establishing the business relationship with Bravo and failed to monitor its activities.
CPSD requests that the Commission open an Order Instituting Investigation (OII) into Americatel's actions. If the Commission finds that Americatel violated any laws, rules, or regulations of this State as described in this report, the Commission should impose penalties against Americatel. Staff is extremely concerned by the findings in this report and questions Americatel's fitness to continue to operate in California. CPSD asks that the Commission consider Americatel's fitness in the OII and what additional sanctions the Commission should impose upon Americatel to protect California consumers.
1 ILD performs billing services for Americatel, such as getting the charges to the local telephone company's statements and processing credits issued by Americatel.
2 September 22, 2008 Americatel Data Response No. 5 (Attachment C-2)
3 November 12, 2009 Americatel Data Response No. 2 (Attachment I)
4 February 2, 2009 Americatel Data Response (Attachment E-2) and April 3, 2009 Americatel Data Response (Attachment F-1)
5 November 12, 2009 Americatel Data Response (Attachment I)
