BEFORE THE PUBLIC UTILITIES COMMISSION OF
THE STATE OF CALIFORNIA

UTILITY CONSUMERS’ ACTION NETWORK )

(UCAN) )

Complainant, )

v. ) Case No._________

)

MCI COMMUNICATIONS SERVICES, INC. )

dba WORLDCOM LLC, 5378 )

and related entities collectively "MCI" )

)

Defendant. )

______________________________________________ )

COMPLAINT AND REQUEST FOR CEASE AND DESIST ORDER AGAINST MCI COMMUNICATIONS SERVICES, INC. FOR IMPOSING UNAUTHORIZED CHARGES ON SUBSCRIBERS’ PHONE BILLS

Pursuant to Section 1702 of the California Public Utilities Code (the "Code"), this complaint is brought and hereby filed by the Utility Consumers’ Action Network ("UCAN") against MCI COMMUNICATIONS SERVICES, INC. dba WORLDCOM LLC, 5378 and related entities (collectively "MCI") for imposing unauthorized charges to customers and failing to respond to complaints about these charges. As set forth below, MCI’s actions violate the California Public Utilities Code and Public Utilities Commission rules.

<!--[if !supportEmptyParas]--> <!--[endif]-->

SUMMARY OF THE COMPLAINT

This complaint addresses MCI’s systematic practice of imposing a long-distance-related “Basic Monthly Fee” upon its customers who have only local phone service as well as the taxes, fees, and surcharges associated with this long distance charge. This practice is commonly known as cramming, and prohibited under Pub. Util. Code § 2890(a), which states that “A telephone bill may only contain charges for products or services, the purchase of which the subscriber has authorized.”

This complaint also asserts a systematic failure by MCI to properly credit all erroneous charges to customers who have complained about this illicit charge. Thus, even under circumstances where MCI has admitted charges are erroneous and purports to make a refund, customers are being deprived of the full value of their refund. MCI inexplicably retains various taxes, fees, and surcharges generated by the original erroneous charge, rather than giving the customer the full value of the refund.

UCAN asserts that customers who have only local service have not authorized the billing of this long distance charge or the associated taxes, fees, and surcharges. In most cases, these customers have separate companies who provide the customers’ long distance service. Thus, the long distance “Basic Monthly Fee” and associated charges are being billed in spite of the fact that customers receive no extra service or benefit for the charge. MCI’s practice of billing this monthly fee and associated charges violates the provisions of the California Public Utilities Code protecting consumers from “cramming” of unauthorized charges. This practice also undermines the public policy underlying the code by charging customers for no additional service or benefit.

MCI’s failure to fully refund customers’ money, such as in the instances herein, is representative of a larger, systematic failure of customer service at MCI to properly refund erroneous charges.

I. THE PARTIES

1. Complainant UCAN is a consumer advocacy organization at 3100 Fifth Ave., Suite B, San Diego, CA 92103, (619) 696-6966, which represents approximately 40,000 ratepayers in California.

<!--[if !supportEmptyParas]--> <!--[endif]-->

2. Defendant MCI is a corporation currently doing business in the State of California as a provider of telecommunications services. MCI’s principal California offices are located at 201 Spear Street, 9th Floor, San Francisco, CA 94105. MCI is subject to the jurisdiction of the Commission.

<!--[if !supportEmptyParas]--> <!--[endif]-->

3. Attorneys and representatives for UCAN are Michael Shames and Art Neill.

<!--[if !supportEmptyParas]--> <!--[endif]-->

4. The representative for MCI is:

Louie DeCarlo

Attorney for MCI

201 Spear Street, 9th Floor

San Francisco, CA 94105

<!--[if !supportEmptyParas]--> <!--[endif]-->

<!--[if !supportEmptyParas]--> <!--[endif]-->

II. BASIC FACTS

<!--[if !supportEmptyParas]--> <!--[endif]-->

5. The California Public Utilities Commission licenses MCI Communications, Inc. as a facilities-based Wireline Carrier, under license No. U-5378-C.

<!--[if !supportEmptyParas]--> <!--[endif]-->

6. MCI is certified by the California Public Utilities Commission to offer telecommunication services.

<!--[if !supportEmptyParas]--> <!--[endif]-->

7. MCI markets and sells such telecommunications services in the State of California.

<!--[if !supportEmptyParas]--> <!--[endif]-->

8. MCI provides service to a significant number of local service only customers in California.

<!--[if !supportEmptyParas]--> <!--[endif]-->

9. MCI, at least as early as May 2006, began charging previously local service only customers for a “Basic Monthly Fee.” Customers erroneously charged this long distance fee were additionally charged taxes, fees, and surcharges related to the long distance charges. The additional taxes and fees have included at least the following: “CA 911”, “CA Teleconnect Fund,” “CA High Cost Fund – B Surcharge”, “CA Universal Lifeline Tel Serv Surcharge,” “CA Relay Service and Commun Devices Fund, A High Cost Fund – A Surcharge,” “Federal Excise Tax.” All of these erroneous charges have continued through the month of August 2006.

<!--[if !supportEmptyParas]--> <!--[endif]-->

<!--[if !supportEmptyParas]--> <!--[endif]-->

III. Customer-Specific Facts Asserted

<!--[if !supportEmptyParas]--> <!--[endif]-->

10. Jack Duclo is an MCI local service-only customer. He does not receive long-distance service from MCI. Beginning in May 2006, Mr. Duclo noticed during the period 5/03/06 - to 06/02/06 that he had begun to receive a “Basic Monthly Charge” of $4.95. The charge appeared under the “Long Distance Summary” section of Mr. Duclo’s bill. [see Exhibit A attached]

<!--[if !supportEmptyParas]--> <!--[endif]-->

11. In addition to the “Basic Monthly Fee,” Mr. Duclo received taxes and fees associated with “MCI long distance service” including the following charges: “CA 911”, “CA Teleconnect Fund,” “CA High Cost Fund – B Surcharge”, “CA Universal Lifeline Tel Serv Surcharge,” “CA Relay Service and Commun Devices Fund, A High Cost Fund – A Surcharge,” “Federal Excise Tax.” [see Exhibit A attached] These taxes appear to be based upon the Basic Monthly Fee that Mr. Duclo should not have been charged. Mr. Duclo’s taxes and fees on his May bill (period 5/03/06 to 06/02/06) amounted to the following: “CA 911”($.03), “CA Teleconnect Fund,”($.01) “CA High Cost Fund – B Surcharge”($.10), “CA Universal Lifeline Tel Serv Surcharge,”($.06) “CA Relay Service and Commun Devices Fund, A High Cost Fund – A Surcharge,”($.01) “Federal Excise Tax.”($.19) These “Government Fees and Taxes” for the May Bill (period 5/03/06 to 06/02/06) totaled $.41. MCI has continued to make these erroneous charges on subsequent bills. [see Exhibit A]

<!--[if !supportEmptyParas]--> <!--[endif]-->

12. Mr. Duclo also received surcharges related to long distance service as follows: “Federal, State & Local Surcharges,” and “Federal Universal Service Fee (FUSF).” As an example Mr. Duclo received surcharges related to long distance service on his May bill as follows: “Federal, State & Local Surcharges,”($.17) and “Federal Universal Service Fee (FUSF),”($1.27). MCI has continued to make these erroneous charges on subsequent bills. [See Exhibit A]

<!--[if !supportEmptyParas]--> <!--[endif]-->

13. Mr. Duclo brought these inappropriate charges to the attention of MCI. The company agreed to correct the charges. However, his May bill erroneous charges and fees were only partly credited to Mr. Duclo’s account. Moreover, the “Basic Monthly Fee” long distance charge continued to appear, and even increased to $5.95 for Mr. Duclo’s June Bill (period 06/03/06 to 07/02/06) and subsequent bills. Associated taxes, fees, and surcharges also continued to be charged.

<!--[if !supportEmptyParas]--> <!--[endif]-->

14. Mr. Duclo inquired about the continued erroneous charges with MCI, which responded with a letter dated July 12, 2006. That letter stated the following: “You recently contacted MCI to request a credit for calling charges. We are pleased to notify you that we have completed our investigation and your account has been credited $5.95.” [See Exhibit B attached]

<!--[if !supportEmptyParas]--> <!--[endif]-->

15. Despite MCI’s partial crediting of the charges to Mr. Duclo’s account, the “Basic Monthly Fee” and associated taxes, fees, and surcharges continue to appear on Mr. Duclo’s bill through the most recent period, the August bill (period 8/03/06 to 9/02/06). Mr. Duclo then was forced to contact MCI for a fourth time, and again obtained a partial credit for these charges. Mr. Duclo is presently awaiting his September bill. All bills subsequent to Mr. Duclo’s requests for refunds have included the erroneous charges, taxes, fees, and surcharges described.

<!--[if !supportEmptyParas]--> <!--[endif]-->

16. As noted, despite receiving credits from MCI, each credit has not reflected the full amount of the erroneous charges. As can be seen in Exhibit A, the discrepancy in each period resulted in an inadequate refund to Mr. Duclo. Examples of the shortfalls in refunds thus far are as follows: May bill, MCI owed $6.80, credited $6.42. June Bill, MCI owed $7.74, credited $6.16. July bill, MCI owed 7.72, credited $6.66.

<!--[if !supportEmptyParas]--> <!--[endif]-->

17. Prior to and throughout the period in which MCI has charged the “Basic Monthly Fee” and associated charges, Mr. Duclo has paid for and received long distance service from National, Inc [See Exhibit C attached]. Mr. Duclo has at no time initiated or used long distance service from MCI.

<!--[if !supportEmptyParas]--> <!--[endif]-->

18. UCAN submits that Mr. Duclo’s experience is representative of a larger body of local service-only customers currently served by MCI.

<!--[if !supportEmptyParas]--> <!--[endif]-->

<!--[if !supportEmptyParas]--> <!--[endif]-->

<!--[if !supportEmptyParas]--> <!--[endif]-->

III. VIOLATIONS OF LAW

<!--[if !supportEmptyParas]--> <!--[endif]-->

19. In California, Public Utilities Code Section 2890(a) governs the cramming of unauthorized charges onto subscriber’s phone bills.

<!--[if !supportEmptyParas]--> <!--[endif]-->

20. Section 2890(a) states that “A telephone bill may only contain charges for products or services, the purchase of which the subscriber has authorized.”

<!--[if !supportEmptyParas]--> <!--[endif]-->

21. The charging of the “Basic Monthly Fee” and associated taxes, fees, and surcharges to customers who maintain MCI as their local service carrier only amounts to a violation of the California Public Utilities Code Section 2890(a).

<!--[if !supportEmptyParas]--> <!--[endif]-->

22. Customers such as Mr. Duclo, who pay for and make use of long distance service provided by companies other than MCI, but maintain MCI as their local service provider only, should not be charged a long distance “Basic Monthly Fee” and associated taxes, fees, and surcharges by MCI. These customers have not authorized the service. These customers do not use the service. The “Basic Monthly Fee” and additional associated charges therefore violates Section 2890(a) of the California Public Utilities Code, as well as fundamental rules of contract law.

<!--[if !supportEmptyParas]--> <!--[endif]-->

23. Additionally, MCI has effectively admitted the “Basic Monthly Fee” and associated charges were erroneous through its partial crediting of the fees to Mr. Duclo upon inquiry. Further, the letter from MCI to Mr. Duclo in Exhibit B documents MCI’s crediting of the charges, and clearly evidences MCI’s acknowledgment of its erroneous charges.

<!--[if !supportEmptyParas]--> <!--[endif]-->

24. Despite MCI’s willingness to provide credits to Mr. Duclo upon inquiry, charges continue to be incurred on subsequent bills, requiring repeated, persistent attention to avoid charges MCI has admitted are in error. MCI’s failure to correct the systematic flaws leading to these charges puts all MCI customers who use MCI for local service only at risk of being erroneously charged.

<!--[if !supportEmptyParas]--> <!--[endif]-->

25. MCI’s inability to properly credit accounts such as Mr. Duclo’s illustrates systematic failures within MCI as to the training of customer service representatives with regards to complaint resolution. Although the exact taxes, fees, and surcharges targeted by the credits is unknown, erroneous charges such as the “Basic Monthly Fee” should be refunded in full along with the full value of all associated taxes, fees, and surcharges.

<!--[if !supportEmptyParas]--> <!--[endif]-->

26. With regard to MCI’s failure to refund customers properly, California Public Utilities Code Section 2890(e) states as follows:

<!--[if !supportEmptyParas]--> <!--[endif]-->

27. “If an entity responsible for generating a charge on a telephone bill receives a complaint from a subscriber that the subscriber did not authorize the purchase of the product or service associated with that charge, the entity, not later than 30 days from the date on which the complaint is received, shall verify the subscriber's authorization of that charge or undertake to resolve the billing dispute to the subscriber's satisfaction.”

<!--[if !supportEmptyParas]--> <!--[endif]-->

28. Further, with regard to MCI’s failure to refund customers properly, California Public Utilities Commission General Order 168, Part 4 Section C(d) “complaint resolution,” states as follows: “If a telephone company receives a complaint that the user did not authorize the purchase of the product or service associated with a charge, the telephone company, not later than 30 days from the date on which the complaint is received, shall either (i) verify and advise the subscriber of the user's authorization of the disputed charge or (ii) undertake to credit the disputed charge and any associated late charges or penalties to the subscriber's bill.” MCI, by failing to credit subscribers’ accounts completely, has violated the California Public Utilities Code and Commission General Order provisions detailed above. MCI has admitted to erroneously charging subscribers, yet it has failed credit the disputed charges, in violation of the California cramming laws and regulations cited.

<!--[if !supportEmptyParas]--> <!--[endif]-->

29. Mr. Duclo is an example of an MCI customer in California who uses MCI for only local service, and yet was charged long distance charges including a “Basic Monthly Fee” and associated taxes, fees, and surcharges in violation of the California Public Utilities Code. Mr. Duclo is still incurring these charges on his bill.

IV. RELIEF SOUGHT

WHEREFORE, UCAN respectfully request that the Commission:

1. Order MCI to immediately cease and desist from each and every violation alleged in paragraphs 5 through 18 effective upon receipt of this complaint through the issuance of an injunction.

2. Order MCI to undertake such steps as are necessary so as comply with state law.

3. Order MCI to make and pay any and all reimbursements and penalties available under Code Sections 2107, 2108 and 2113 to similarly situated customers..

5. Order MCI to pay commensurate punitive damages upon finding of intentional misconduct.

6. Order all other remedies and penalties and cost as the Commission may determine just and equitable.

 

Respectfully submitted, Dated: October 10, 2006

 

_________________________

Art Neill

Michael Shames

Utility Consumers’ Action Network (UCAN)

3100 5^th Ave. Suite B

San Diego, CA 92103

(619) 696-6966

Fax: 696-7477

mshames@ucan.org

ATTORNEYS for Complainant

<!--[if !supportEmptyParas]--> <!--[endif]-->

<!--[if !supportEmptyParas]--> <!--[endif]-->

<!--[if !supportEmptyParas]--> <!--[endif]-->

Verification

I, Michael Shames, am an officer of complainant corporation herein, and am authorized to make this verification on its behalf. The statements in the foregoing document are true and of my own knowledge, except as to the matters which are herein stated on information and belief, and as to those matters I believe them to be true. I declare under penalty of perjury that the forgoing is true and correct. Executed on October 10, 2006 at San Diego, California.

<!--[if !supportEmptyParas]--> <!--[endif]-->

_____________________

Michael Shames, Declarant

<!--[if !supportEmptyParas]--> <!--[endif]-->

<!--[if !supportEmptyParas]--> <!--[endif]-->

<!--[if !supportEmptyParas]--> <!--[endif]-->

<!--[if !supportEmptyParas]--> <!--[endif]-->

<!--[if !supportEmptyParas]--> <!--[endif]-->

<!--[if !supportEmptyParas]--> <!--[endif]-->

<!--[if !supportEmptyParas]--> <!--[endif]-->

<!--[if !supportEmptyParas]--> <!--[endif]-->

<!--[if !supportEmptyParas]--> <!--[endif]-->

<!--[if !supportEmptyParas]--> <!--[endif]-->

EXHIBIT A

<!--[if !supportEmptyParas]--> <!--[endif]-->

<!--[if !supportEmptyParas]--> <!--[endif]-->

MAY BILLS OF JACK DUCLO

<!--[if !supportEmptyParas]--> <!--[endif]-->

<!--[if !supportEmptyParas]--> <!--[endif]-->

<!--[if !supportEmptyParas]--> <!--[endif]-->

<!--[if !supportEmptyParas]--> <!--[endif]-->

<!--[if !supportEmptyParas]--> <!--[endif]-->

<!--[if !supportEmptyParas]--> <!--[endif]-->

<!--[if !supportEmptyParas]--> <!--[endif]-->

<!--[if !supportEmptyParas]--> <!--[endif]-->

<!--[if !supportEmptyParas]--> <!--[endif]-->

<!--[if !supportEmptyParas]--> <!--[endif]-->

<!--[if !supportEmptyParas]--> <!--[endif]-->

<!--[if !supportEmptyParas]--> <!--[endif]-->

EXHIBIT B

<!--[if !supportEmptyParas]--> <!--[endif]-->

<!--[if !supportEmptyParas]--> <!--[endif]-->

<!--[if !supportEmptyParas]--> <!--[endif]-->

LETTER FROM MCI TO JACK DUCLO

<!--[if !supportEmptyParas]--> <!--[endif]-->

<!--[if !supportEmptyParas]--> <!--[endif]-->

<!--[if !supportEmptyParas]--> <!--[endif]-->

<!--[if !supportEmptyParas]--> <!--[endif]-->

<!--[if !supportEmptyParas]--> <!--[endif]-->

<!--[if !supportEmptyParas]--> <!--[endif]-->

<!--[if !supportEmptyParas]--> <!--[endif]-->

<!--[if !supportEmptyParas]--> <!--[endif]-->

<!--[if !supportEmptyParas]--> <!--[endif]-->

<!--[if !supportEmptyParas]--> <!--[endif]-->

<!--[if !supportEmptyParas]--> <!--[endif]-->

EXHIBIT C

<!--[if !supportEmptyParas]--> <!--[endif]-->

<!--[if !supportEmptyParas]--> <!--[endif]-->

DUCLO LONG DISTANCE BILL

<!--[if !supportEmptyParas]--> <!--[endif]-->

<!--[if !supportEmptyParas]--> <!--[endif]-->