ALJ/JRD/MOD-POD/tcg Mailed 7/02/2002

Decision 02-06-077 June 27, 2002

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Investigation on the Commission's Own Motion Into the Operations and Practices of Telmatch Telecommunications, Inc., (U 5715), to Determine Whether It Has Violated the Laws, Rules and Regulations Governing the Manner in which California Consumers are Billed for Telecommunication Services.

Investigation 99-09-001 (Filed September 2, 1999)

OPINION ORDERING REPARATIONS AND IMPOSING SANCTIONS

The Lustigman Firm, PC by Sheldon S. Lustigman, Attorney at Law, for Telmatch Telecommunications, Inc.; Heller, Ehrman, White & McAuliffe by Raymond Sheen, Michael Plimack, and David Brownstein, Attorneys at Law, for Telmatch Telecommunications; respondent.

Stephanie E. Krapf, Attorney at Law, for Pacific Bell; Elaine Lustig, Attorney at Law, and Jay Tresler, for GTE California, Incorporated; interested parties.

Carol A. Dumond, Attorney at Law, for Legal Division.

TABLE OF CONTENTS

Title Page

OPINION ORDERING REPARATIONS AND IMPOSING SANCTIONS 1

1. Summary 2

2. Procedural History 2

3. Telmatch's History as Geo Communications 3

4. Position of Consumer Services Division 5

4.1 Solicitation - The Sweepstakes Method 5

4.2 Entry Form and Consent 5

4.3 Pub. Util. Code § 2890 7

4.4 Restitution and Fines 8

5. Position of Telmatch 9

6. Discussion 10

6.1 The Commission Has Authority to Redress The Imposition
of Unauthorized Charges on Consumers' Telephone Bills 11

6.1.1 Pub. Util. Code § 451 11

6.1.2. Pub. Util. Code § 761 14

6.1.3 Pub. Util. Code § 2890 (a),(b),(c) 16

6.2 Telmatch's Solicitation and Subsequent Billing of Consumers Constituted Cramming 17

6.3 Contract Law 21

6.4 Filed Rate Doctrine 23

6.5 Sanctions 23

6.5.1 Reparations 23

6.5.2 Fines 24

6.5.3 Operating Authority 29

6.6 Other Matters 29

6.7 Appeals 30

Findings of Fact 34

Conclusions of Law 37

O R D E R 39

Attachment A

Attachment B

1. Summary

This decision addresses the Commission's authority under Pub. Util. Code Section 451¹ to investigate allegations that a regulated utility has imposed unauthorized charges on consumers' telephone bills, a practice known as "cramming." This decision determines that Telmatch Telecommunications, Inc. (Telmatch) has engaged in cramming, that Telmatch should pay reparations and fines, and that Telmatch's operating authority should be revoked.