IV. The Proposed Settlement
Under the proposed settlement, Talk will pay $1 million in customer restitution, related expenses, and fines. Prior to the settlement being filed, Talk paid the Commission $400,000 of this amount, which has been placed in an escrow account pending resolution of this investigation. According to the proposed settlement, once the Commission approves it, the Commission will distribute $374,800 of these monies to the Settlement Claims Administrator for customer restitution ($25 per consumer).3 The parties agree there are approximately 14,992 "eligible consumers" to receive restitution.4
The settlement also earmarks $625,200 as a fine and related expenses for distributing the restitution to consumers. Of this amount, within 10 days after the Commission adopts the settlement, Talk will pay a Settlement Claims Administrator $40,000 to distribute the monies to "eligible consumers," and will also pay $60,000, which constitutes the first monthly installment of the fine. Talk will pay the balance of the fine within 6 months in monthly installments as follows. Within 30 days after the first installment payment, and before the end of each 30 day period following the due date of the immediately preceding installment payment, Talk will pay the Commission $100,000 until the total of the monthly installment payments delivered to the Commission equals $560,000.
The Settlement Claims Administrator will also report its monthly balance and disbursements to the Commission according to the terms of the settlement agreement and related documents. The Settlement Claims Administrator will return any monies it is unable to deliver to "eligible consumers" pursuant to the terms of the settlement to the Commission, and these monies will be deemed to escheat to the State of California and be deposited in the state's General Fund.
In the proposed settlement, Talk also admits that it did not verify some customers' decisions to change their telephone service to Talk by an independent third-party verification company, and therefore admits to violating Pub. Util. Code § 2889.5.
3 The settlement designates Rosenthal & Company LLC, 35 Leveroni Court, Suite 150, Novato, California 94949, as the Settlement Claims Administrator. 4 The settlement agreement defines an "eligible consumer" as "those California consumers (whether an individual, person, or corporation) who were reported by the Commission Consumer Affairs Branch (CAB), or a local exchange carrier (LEC) (e.g., Pacific Bell or Verizon), as having complained that Talk or its agent switched or caused the LEC to switch without authorization the consumer's presubscribed local, toll or long distance telephone service provider to Talk; charged the consumer without authorization for telephone services; or engaged in abusive marketing operations and practices. `Unauthorized switching' also means the following: (i) an unauthorized change of provider accomplished by using an underlying carrier's CIC, which the LEC designated and recorded as a PIC dispute involving the underlying carrier but which the underlying carrier determined as a PIC dispute reported by an LEC or an underlying facilities-based provider, and involving Talk, its parent, agent, affiliate, or underlying facilities-based provider. An Eligible Consumer will be entitled to restitution for each telephone line(s) that was switched without authorization."
