Decision 03-04-062 April 17, 2003
Before The Public Utilities Commission Of The State Of California
Investigation of USP&C to determine whether it has violated Public Utilities Code Section 2889.9 by failing to provide Commission Staff with requested information and whether the Commission should order California telephone companies to cease providing billing and collection services to USP&C. |
Investigation 99-10-024 |
OF DECISION (D.) 01-04-036
I. INTRODUCTION
We instituted this investigation into the billing and collection practices of USP&C on October 21, 1999. USP&C served as a billing agent for $51.5 million in billings to California customers from January, 1998 to June, 1999. Of the total amount billed by USP&C through Pacific Bell during this period, $27 million, or approximately 52% of the total, was refunded at the customer's request. The remaining $24.5 million was collected by USP&C and paid to the service providers, less the fees charged and retained by USP&C.
The evidence presented against USP&C at Commission hearings is summarized as follows: USP&C is a Delaware corporation with its principal place of business in Kansas City, Missouri. USP&C is an aggregator of billings for telecommunications-related services, and acts as a billing agent between these service providers and the California Local Exchange Carrier ("LEC"), such as Pacific Bell, who actually bills the customer. The LECs provide billing and collection services to billing agents such as USP&C pursuant to Commission-approved tariffs, which require all transactions to be accurate and consistent. These tariff provisions obligate USP&C to submit only accurate and authorized charges to Pacific Bell.
Pacific Bell has a billing and collection services contract with its billing agents, such as USP&C, which states that the agreement may be terminated if Pacific Bell receives more than one complaint per 30,000 bills rendered, or if the billing agent's customer refund rate exceeds 15% of the total amount billed. From January to August, 1999, USP&C's customer refund rate always exceeded 15% of the total amount billed, ranging from 36.5% to 69.02%, with an average of 52% for the entire period. In December, 1999, Pacific Bell ceased to provide billing services to USP&C.
In terms of its relationship with various service providers, USP&C contracted with companies that conducted business under several different unregistered aliases and used up to four different names for identical services. For example, USP&C acted as a billing agent for Spring Telecom, Inc., which sold 800 number service under four different product names ("Call Mgr Plus," "Dial Plan," "Gateway Svc," and "Call Plan), as well as four different provider names ("Progressive Technologies," "Voiser Telecom," "Voice Processing Systems," and "United Voice").
A prehearing conference was held in this proceeding on December 1, 1999. Participants included USP&C, the Commission's Consumer Services Division ("CSD"), Pacific Bell, the Latino Issues Forum and the Greenlining Institute. On December 3, 1999, the Assigned Commissioner issued a scoping memo for the proceeding. On January 7, 2000, USP&C and CSD filed a joint motion seeking approval of a settlement agreement between them, covering only CSD's allegation that USP&C had violated Public Utilities Code Section 2889.9(f)1 by failing for several months to provide Commission staff with requested information regarding billing and collection practices and the identity of the service providers USP&C billed for. On February 17, 2000, both CSD and USP&C filed motions stating that, as to matters not covered by the settlement, there were no disputed issues of material fact, and each party sought a judgment in its favor.
On April 11 and 12, 2000, the presiding officer conducted evidentiary hearings. Following the conclusion of hearings, all parties other than Pacific Bell filed initial briefs, and all parties filed reply briefs. A Presiding Officer's Decision ("POD") was issued on October 20, 2000, and USP&C, CSD and Pacific Bell each filed appeals of the POD.
On April 19, 2001, we issued D.01-04-036. The Decision approved the settlement agreement between USP&C and CSD and also found that USP&C violated Sections 2890(e)(2)(A)-(B) and imposed a $1.75 million fine for such violations. The Decision also ordered all California LECs to cease permanently providing USP&C billing and collection services. We also ordered USP&C to show cause why it (1) should not be required to disgorge all amounts retained from unauthorized billings, and (2) should not be fined for failing to comply with Sections 2889.9 and 2890.2
On May 3, 2001, USP&C filed a motion for partial stay of the payment of fines ordered in D.01-04-036. On May 24, 2001, we denied USP&C's motion for partial stay, finding that USP&C failed to demonstrate good cause for the issuance of a partial stay. To date, USP&C has not paid the fines assessed in D.01-04-036.
USP&C filed a timely application for rehearing of D.01-04-036 on May 23, 2001. CSD filed a response to USP&C's rehearing application on June 7, 2001.
We have reviewed all of the allegations raised in the rehearing application, and determine that cause does not exist for granting the application.
1 Unless otherwise noted, all statutory citations are to the California Public Utilities Code. 2 Section 2890 has been amended since the issuance of D.01-04-036. All discussions of Section 2890 herein will reference Section 2890 as it existed at the time of the issuance of D.01-04-036.
