Health Care and Utilities

States demand One Call answers: Carmel telephone firm 'out of control'

March 27, 2006

A Carmel long-distance and operator service company has a lot to answer for these days.

After crossing wires with Indiana regulators and with the Federal Communications Commission last year, One Call Communications now is being accused by Iowa and Missouri regulators of putting bogus charges on phone bills and then harassing people to pay.

Missouri Attorney General Jay Nixon this month filed a lawsuit alleging the privately held company violated state and federal consumer protection laws. Nixon said the company billed 49 consumers $10 to $538, with some of the charges assessed when the consumers weren't even home.

Missouri regulators also said One Call often refused to explain the charges after consumers called to complain. The firm allegedly used hardball collection tactics, including calling a person's home 22 times a day from early morning to late evening.

"This company is out of control and needs to be stopped," said Missouri's top lawyer.

He will have to get in line.

The FCC has been trying since last summer to wrest a settlement from One Call, alleging it owes more than $2 million in unpaid universal service fees.

Interstate carriers are required to pay the fees to help fund telecommunications improvements in rural and high-cost serv- ice areas. Some of the money goes toward rural health care and school and library programs.

Closer to home, One Call remains in talks with the Indiana Office of Utility Consumer Counselor to resolve complaints by a half-dozen phone consumers. Among them: an Avon couple who found an $811 bill from One Call on their AT&T phone bill for dozens of calls the Carmel company claimed they made to the United Kingdom.

The state is empowered to seek fines of up to $2,500 per violation.

"I can confirm that we are still talking, and are hopeful that we will reach an agreement in the near future," said Anthony Swinger, spokesman for Consumer Counselor Susan Macey. Her office had hoped to file a settlement in early January, according to Indiana Utility Regulatory Commission filings.

One Call recently told the commission it needed additional time to compile a list of consumers covered by the proposed Indiana settlement.

One Call's general counsel, Ann Bernard, did not return phone calls.

A prominent Indianapolis businessman who identifies himself as One Call's chairman also would not take calls.

"No one here is available for any comments. Thank you for calling," said an assistant to Monument Advisors CEO Larry Wechter. Nor did Wechter respond to a request by e-mail to discuss the company's regulatory issues.

Wechter's Monument Advisors, a private equity fund, financed a management buyout of One Call in 2002. Evansville resident Larry Dunigan founded the firm in 1982.

"This is a textbook partnering opportunity for Monument," Wechter said in 2002 of the investment in One Call. "We feel we have an experienced team in place with a vision to take this business to the next level."

Records show that by 2003, the company had revenue of more than $270 million. At that time, according to an industry database, it had about 400 employees. In a statement last year, the company said it employed 70 at its Carmel headquarters.

Battling regulators

One way One Call is trying to extricate itself from burgeoning consumer complaints is by arguing that state regulators lack jurisdiction.

That's essentially what One Call alleges in a lawsuit suit it filed last month in federal court in Iowa against the Iowa Utilities Board.

The Carmel company filed the suit after the Iowa Office of Consumer Advocate asked the utilities board to seek civil penalties on behalf of a Stanwood, Iowa, man who says he was charged $33.95 for One Call Internet service he did not authorize.

Iowa regulators say they have 14 active cases against One Call. Most of them involve "modem hijacking." It most commonly occurs when a person opens an email that disconnects his or her modem and reconnects it to a long-distance or international number. Iowa regulators said One Call handled billing for a firm that used consumers' modems to place calls to "adult content Web sites."

One Iowan who complained described herself as a 65-year-old grandmother who lives alone. The woman denies having accepted collect calls from the phone sex firm. One Call "has produced a voice recording allegedly showing the call was accepted by a male who identified himself as 'Marcus Welby,'" according to the state's response to One Call's lawsuit.

In the suit, the company claims that because many of the calls it handles are interstate in nature, state jurisdiction is not applicable. In court papers, the company said it typically resolves such complaints informally with board staff and refunds disputed amounts. "In each case, One Call has refunded the disputed charges, even though its records showed the calls, in fact, took place," the company states.

One Call complains that Iowa's Office of Consumer Advocate then presses for civil penalties, a process that "has been, and appears likely to continue to be, tainted by lack of jurisdiction, legal error, and procedures which violate One Call's due process rights."

Ultimately, the company argues, the regulatory action is "damaging One Call's reputation and good will, and improperly costing One Call significant financial resources as well as the critical resource of staff time."

Nonsense, the Office of Consumer Advocate said in a subsequent court filing in support of the utilities board. The Consumer Advocate describes One Call's suit as "a complete assault on ... the ability of the state to exercise its police powers to protect its people from the species of fraud and abuse that is slamming and cramming."

"We don't believe their case has any merit and we're resisting it," said Craig Graziano, an attorney for Iowa's Office of Consumer Advocate.

Collection issues

Regulators also are targeting One Call for its collections practices.

Missouri Attorney General Nixon alleges that One Call refused to explain to consumers how the charges were incurred, what services were used, and who authorized them.

"In at least one case, a consumer was asked to give his telephone number and credit card numbers and, when he refused, was unable to speak with a One Call ... representative about the charges that were placed on his phone bill."

The Missouri suit also alleges that the company, in attempting to collect charges, phoned some consumers 22 times a day.

"In some cases, [One Call] disturbed and harassed consumers with repeated collections calls, without their prior consent, late at night and/or early in the morning when the consumers were asleep. Some consumers reported being disturbed and harassed ... every five minutes for over an hour."

New York City creative consultant Sanford Stele said he endured up to three calls per hour during two weeks last October. One Call was attempting to collect $8.69 for a two-minute long-distance call he swears he never made.

"For 11 hours a day, they invaded my life. They seized authority over my phone," said Stele, who got relief only after asking an Indianapolis attorney to write a threatening letter to the Carmel firm.

"I'm calling it an assault and essentially a home invasion."

Stele can little afford to have his phone tied up. He writes promotional material for TV networks, including a four-page insert in The New York Times promoting the recent History Channel documentary on Abraham Lincoln.

So infuriated is Stele and frustrated by regulators' lack of effectiveness that he figures the only way to stop One Call is through federal racketeering prosecution. He's looking for an attorney to take the case.

But One Call has a formidable record of success in the legal arena.

In 2002, in its first action against One Call, the FCC proposed a $5.1 million fine against the company for allegedly failing to identify itself to consumers who misdialed 1-800-Collect-the collect call service by AT&T.

In a so-called "fat finger" scheme, One Call set up several similar phone numbers such as 1-800-Coolect to harvest misdialed calls to its own collect call service.

But One Call got off relatively easy-paying the FCC $500,000 and agreeing to identify itself to callers and to change other practices. A One Call attorney in Washington, D.C., boasted on his Web site that his firm's work "resulted in the greatest penalty reduction in any FCC enforcement proceeding up to that time."

"They have confidence they can beat any kind of assault," Stele said.

And why not, he says: "They settle a $5 million complaint against them [by the FCC] for 10 cents on the dollar."
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