Background

Devine filed its application on November 1, 2006 pursuant to the registration process adopted in Decision (D.) 97-06-107 and related decisions. The application was amended twice for substantive reasons and a third time for the purposes of integrating and verifying the amendments. A protest to the application was filed by the Commission's Consumer Protection and Safety Division (CPSD) on November 21, 2006.¹

In order to protect consumers from the misleading sale of prepaid telephone services, the Commission adopted the Consumer Protection Initiative (CPI) Decision (D.06-03-013) in March 2006. The Commission works with the California Attorney General (AG) and other appropriate authorities "to investigate claims of failure to disclose appropriate information for prepaid calling cards." (D.06-03-013 at p. 42.) Consistent with the CPI, in October 2006, the Commission authorized staff to cooperate with the AG in investigating Devine as part of a larger effort to step up enforcement of rules pertaining to prepaid phonecards, or "telephone prepaid debit cards" as they are described in Pub. Util. Code §§ 885-86.

Under §§ 885-86, prepaid phonecard providers must register with the Commission under Pub. Util. Code § 1013. CPSD alleged that Devine was a prepaid phonecard provider that had failed to register with the Commission. During further investigation with the AG, CPSD also addressed concerns that Devine was selling prepaid phonecards without accurately disclosing all rates, fees, surcharges, terms, and conditions associated with use of the cards, as required by Business & Professions (B&P) Code § 17538.9. On the basis of their investigation, CPSD and the AG drafted a complaint alleging violations of Pub. Util. Code § 885-86 and B&P Code § 17538.9, including failure to register and failure to accurately disclose the company's name, rates, and surcharges.

Settlement discussions between Devine, CPSD, and the AG led to agreement, as reflected in the following documents: (1) a Stipulation for Entry of Final Judgment and Permanent Injunction, which was approved and ratified by the Commission April 12, 2007; (2) an All-Party Settlement resolving the issues in this particular protested application proceeding; and (3) a Declaration, executed by Devine's principal, Douglas S. Devine, averring that certain representations made to AG and CPSD were true and correct.

Following the approval of the Stipulation, the AG and CPSD filed the complaint against Devine in the San Francisco Superior Court, and presented the Court with the Stipulation and Proposed Judgment. The Proposed Judgment contained an injunction prohibiting Devine from "advertising, issuing, distributing, marketing, selling, or otherwise offering Prepaid Calling Cards or any other telecommunications service in California without first obtaining a valid certificate of public convenience and necessity from the Commission." (Joint Motion at Appendix A, p. 3.) In addition, Devine was ordered to pay $118,000 in civil penalties divided evenly between the AG and CPUC, and ordered not to advertise, issue, distribute, market, sell, or otherwise offer Prepaid Calling Cards in California until these penalties are paid in full. (Id. at Appendix A, pp. 4, 6-7).

The Superior Court entered the Judgment pursuant to the Stipulation of the parties on April 13, 2007. Now that the Court has entered the Judgment and Devine has addressed CPSD's concerns, CPSD has filed a withdrawal of its Protest to Devine's application and moves jointly with Devine for the approval of the Settlement Agreement.

¹ CPSD filed an amendment to that protest, correcting the wording of the caption on the protest filing, on January 10, 2007.