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'Crammers' facing big fines: Two firms accused of billing phone customers for directory assistance services not ordered

January 9, 2006

As in $1,071,000.

That's how much the Office of Utility Consumer Counselor wants the Indiana Utility Regulatory Commission to ring up in fines against Casper, Wyo.-based Micronet Inc.

It also requests that the commission turn over the case to Indiana Attorney General Steve Carter for prosecution under the state's deceptive practices act.

Micronet is accused of billing hundreds of Indiana business, residential and state government lines in late 2004 and early 2005 for directory assistance service callers never requested or authorized.

OUCC also wants $1.7 million in sanctions against H.T. Teleservices Inc., a Detroit company that did the billing for Micronet.

The two, now facing combined sanctions of $2.14 million, are accused of 364 so-called "cramming" violations.

"I'm pretty certain this is the highest number of violations we've had in a cramming or slamming case ... both in terms of the number of alleged violations and the size of the recommended fines," said Anthony Swinger, spokesman for Consumer Counselor Susan Macey.

The IURC normally wouldn't consider such large fines or a referral to Carter, but will in this case because the companies failed to cooperate, said Mary Beth Fisher, spokeswoman for the Indiana Utility Regulatory Commission.

"It may be the very first time we've had to consider doing something like this-just because of their complete lack of responsiveness," she said.

Cramming is adding unauthorized charges to customer accounts, while slamming is changing customers' phone service without their permission.

Regulators call what happened to Greenwood accountant David B. Mann cramming, but he calls it "theft" deserving of more than monetary penalties.

"Unless the attorney general locks somebody up, high in the food chain, it's not going to change," said Mann, who wound up with a handful of phone bills containing Micronet charges.

If the Attorney General takes up the case, the most the state could assess under the deceptive sales act is $5,500 per violation.

Perhaps most costly: the OUCC's filing last month with the IURC seeking revocation of Micronet's certificate of territorial authority to provide telephone service in Indiana.

With that certificate, Micronet was able to convince phone companies to tack charges onto customer bills for directory assistance services customers said they never authorized.

"This order should specifically preclude either company from acting as the agent of a telecommunications company by placing billing orders with Indiana local exchange carriers or by issuing bills to Indiana consumers," wrote Assistant Consumer Counselor J. David Agnew.

But neither company seems to care.

Even the Indianapolis lawyer who represented Micronet and H.T. Teleservices hasn't heard from the firms since October, when executives Frank Santa of Micronet and Thomas Holecz of H.T. Teleservices failed to appear for a deposition at the OUCC.

The firms did not return phone calls from their counsel, Andrea Hermer of Indianapolis law firm Stewart & Irwin. As a result, her law firm recently resigned from the case. Hermer said she cannot comment on the firms and declines to say whether the law firm is out money.

Calls to Micronet and H.T. Teleservices were not returned. Micronet operates the Web site www.phonebillsaver.com

Before disappearing into the fiber-optic ether, the companies did put up a legal fight.

In a July filing with the IURC, they argued Micronet is not a "telecommunications provider" under Indiana's cramming statute.

"Micronet does not provide 'telecommunications' to its customers, but instead, provides an 'enhanced' or 'information' service which falls outside the statutory definition for 'telecommunications,'" the firm stated in its filing.

The bottom line, argued the companies, was that charges under the OUCC's complaint "consisted exclusively of charges for directory assistance service, which is an unregulated service."

The IURC could act on the OUCC's request for sanctions as early as this month. The OUCC wants the commission to file suit against the companies in court to recover the $2.14 million in fines.

Even if Micronet and H.T. Teleservices each end up paying $1 million in sanctions, it could be a small price to pay "if I cram 1,000 or 10,000 or 100,000 people and I get it in the first three or five months before somebody looks at the bill," Mann said.

"If they get caught and do toss in $1 million [to the state], so what? ...Think of how many phone bills there are in the state of Indiana."

Accountant Mann did what many experts recommend phone customers do on a frequent basis: Examine the line item charges on their phone bills.

"I looked down and said, 'Who in the hell are these people?'" Mann recalled.

Swinger said phone customers aren't obligated to pay the amount in dispute after they bring the matter to state regulators.

"It's just so important for consumers to read their phone bills each month," he said.
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