BEFORE THE PUBLIC UTILITIES COMMISSION OF STATE OF CALIFORNIA
Order Instituting Investigation on the Commission's Own Motion Into the Operations, Practices, and Conduct of OSP Communications LLC, and John Vogel, an Individual, to Determine Whether OSP Communications LLC and John Vogel Have Violated the Laws, Rules and Regulations of this State in the Provision of Operator and Calling Card Services to California Consumers; and Whether The Billing Resource LLC, a Delaware Corporation, and The Billing Resource LLC d/b/a/ Integretel, a California Corporation, Should Refund and Disgorge All Monies Billed and Collected on Behalf of OSP Communications LLC. |
FILED PUBLIC UTILITIES COMMISSION MAY 26, 2011 SAN FRANCISCO OFFICE I.11-05-028 |
ORDER INSTITUTING INVESTIGATION
ORDER TO SHOW CAUSE; NOTICE OF HEARING
I. INTRODUCTION
By this Order, the Commission institutes an investigation to determine whether OSP Communications, LLC ("OSP") and its alleged owner John Vogel ("Vogel") (collectively "Respondents") have violated Public Utilities Code Section 2890 or any Commission rule, regulation, order, requirement, or other state law by allegedly placing unauthorized collect call charges on California consumer telephone bills.1 The practice of placing unauthorized charges on phone bills is known as "cramming" and is prohibited by Section 2890.2 We will additionally determine whether these Respondents operated calling card services in violation of Section 885, or any Commission rule, regulation, order, requirement, or other state law for its alleged provision of calling cards without Commission authorization.
By this Order, the Commission also names The Billing Resource LLC ("TBR"), a Delaware corporation, and The Billing Resource LLC d/b/a Integretel LLC ("Integretel"), a California corporation, as "Relief Respondents" with respect to the charges they billed and collected on behalf of OSP. The Commission directs TBR and Integretel to place all monies in its possession related to any OSP charges in an interest-bearing escrow or trust account pending resolution of this Investigation.
We are prompted to take this action by a large number of complaints lodged against Respondents by consumers. Respondent OSP's billing agents reported to the Commission receiving 12,750 complaints from Californians concerning OSP's charges on their telephone bills. Further, the suspicious nature of OSP's billing transactions caused OSP's billing agent, TBR, to terminate billing and collection services for OSP and to withhold approximately $1.2 million in funds collected on behalf of OSP.
The Commission's Consumer Affairs Branch ("CAB") and the Federal Trade Commission ("FTC") have also received a number of complaints about OSP's alleged unauthorized charges. All of these complainants deny authorizing the OSP charge and Staff believes that the same is true for the majority of complaints reported by its billing agents. We further note that Respondents' activities have spurred consumer allegations of fraud as reflected on various internet websites like www.ripoffreport.com and www.complaintsboard.com.
The Commission's Consumer Protection and Safety Division ("CPSD") Staff has prepared an investigative report (Staff Report) documenting these allegations, including declarations obtained from victims.3 Staff's report also documents the suspicious activity with respect to OSP's billings. For example, from a random sample of the call "records" generated by OSP, neither of the local exchange carriers (AT&T and Verizon) that would have terminated the collect calls purportedly received by OSP's "customers" could locate validating Automatic Messaging Accounting ("AMA") call records, commonly referred to as switch records. The lack of switch records corroborates the universal sentiment by consumers that they never received nor authorized the collect calls billed by OSP. Further, OSP's significantly high refund rates, 53% in 2009 alone and 35% from 2007 to 2010, also raises serious doubts as to the legitimacy of OSP's billings.
As explained herein, Staff has produced substantial evidence which appears to show that OSP crammed over 250,000 unauthorized collect call charges on California customer telephone bills, totaling over $8 million. Therefore, this Order provides notice that a hearing will be held on the matter, and we direct Respondent OSP to show cause as to why the Commission should not find violations of section 2890, and accordingly section 451 (for unjust and unreasonable charges) in this matter, and why the Commission should not impose penalties, and or any other forms of relief for the apparent violations.
1 Hereinafter, all section references are to the Public Utilities Code unless otherwise specified.
2 See, e.g., D.02-10-059 (Qwest), Slip Op. at 3 ("caus[ing] various unauthorized charges to be added to the customers' telephone bills" is "known as `cramming' [and] is unlawful").
3 Staff's Report contains attachments submitted by entities to the Commission as confidential pursuant to section 583 and therefore a Public Version of the Staff Report is attached to this Order.
