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Phone Complaints Go to Court

November 02, 2000|ELIZABETH DOUGLASS |

It used to be that consumer complaint issues involving phones and phone services were handled almost exclusively by state and federal regulators, who were charged with keeping phone companies in line and in business.

But things are murky now. In this era of partially deregulated communications, only some phone services get continual regulatory scrutiny, while others--most notably "deregulated" high-speed Internet services from phone companies--do not.

So, as customer confusion and frustration grow, consumers increasingly turn to the courts instead of slow-moving government agencies for redress.

A few recent lawsuits are worth noting because they don't appear frivolous and because they seek class-action status--meaning the lawyers believe their cases involve alleged misdeeds that affected many other phone customers.

A case filed a few weeks ago in federal court in California, for example, accuses long-distance provider MCI WorldCom of offering callers 10 free minutes on a calling card and then not delivering the promised credit unless customers noticed the omission and complained.

The lawsuit, brought on behalf of MCI WorldCom customers George Cuza and Ky Du, alleges that MCI WorldCom's promotion induced customers to use their calling cards--at higher per-minute rates--and profited from the calls by not providing the 10 free minutes.

Attorney Harry Rebhuhn, who is handling the case along with two other firms, alleges that MCI WorldCom's practice is a violation of the Federal Communications Act, and the suit seeks certification as a class-action case, plus compensatory damages and interest on the alleged overcharges.

MCI WorldCom also is the target of a fraud case brought by California Atty. Gen. Bill Lockyer and other officials and has been the subject of many complaint cases nationwide.

A spokeswoman for WorldCom, which bought MCI and still sells long-distance service using that name, declined to comment on the cases because they are still pending.

Two other new cases take aim at Verizon Communications, the local phone company formerly known as GTE in California.

The first suit, filed last month in Los Angeles, takes aim at the phone company's practice of continuing to bill customers for renting so-called rotary phones that became obsolete or were long ago replaced.

Consumer groups have repeatedly warned of this problem, which stems from the era when phone companies routinely rented phones instead of selling them. That practice disappeared years ago, and basic telephones can be bought nowadays for well under $20.

But many customers--a high percentage of them elderly--are still paying rental fees to phone companies without realizing it. On Verizon's phone bills, the charge is listed only as "equipment rental."

In the past, customers who discovered the charges on their phone bills have fought for and received refunds from phone companies. Such was the case with Wilma Ker of Granada Hills, who paid GTE $3.40 per month for 12 years before a companion questioned the charge last year.

Ker discovered she had paid more than $400 in fees to rent an old-style rotary phone that she hadn't used for more than a decade. After she complained vigorously to GTE, the phone company gave her a credit equal to six months of fees. Unimpressed, she filed a formal complaint with state regulators, which prompted a more generous--but undisclosed--settlement from the phone company.

The lawsuit alleges that Verizon has not taken steps to remove the rental charges, and has not clarified the charge on bills. The company has therefore collected hundreds of dollars from customers for phones that originally cost about $50 and have been obsolete for years, according to the suit.

Attorney Marc Coleman of Long Beach teamed with Hadsell & Stormer of Pasadena to bring the case on behalf of customers David and Jennifer Cundiff of Los Angeles County and John and Eva DeBruin of Orange County.

The case, which seeks class-action status, accuses Verizon of fraud, unjust enrichment and violating the state business and professions code. The lawsuit seeks refunds and a prohibition against further rental charges by Verizon.

By contrast, the state's largest local phone company, Pacific Bell, unilaterally halted phone rental charges years ago.

A Verizon spokesman said the company still gets customers who "find it easier" to rent their phone instead of buying it. Nonetheless, the company sent notices in July to each of its California customers who rent phone equipment, telling them that renting has its advantages, but that "you may pay more by renting phone equipment over a period of time than if you bought it."

Spokesman Bill Kula said about 116,000 Californians rent phones from the company, paying from $4 to $16 per month.

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