Attorney General, Public Utilities Commission Sue MCI in Joint Crackdown to Protect Consumers

(SAN FRANCISCO) – In a major joint consumer protection action, Attorney General Bill Lockyer and the California Public Utilities Commission today filed a civil lawsuit against Worldcom Inc., also known as MCI, for alleged false and misleading advertising and other unfair business practices.

"California consumers were lured into choosing MCI as their long distance carrier through false, misleading and undelivered advertising promises," Lockyer said. "We believe that the company took unjust advantage of customers and undermined other businesses through the use of illegal and unfair tactics. The slamming, cramming and unfair business practices we found add up to wrong numbers for consumers."

CPUC President Loretta Lynch added: "Thousands of consumers have complained to us. MCI has slammed them, crammed them and misled them. The PUC has received more complaints about MCI's deceptive practices than any other long-distance carrier. By joining the Attorney General in the joint prosecution of MCI, California is acting forcefully to halt these practices and protect California consumers."

The civil complaint was filed in San Francisco Superior Court against Worldcom Inc., a Georgia company formerly known as MCI WorldCom Inc. MCI sells its long distance telephone services to consumers through direct mail, telemarketing, the Internet and advertising in print, television and radio.

The complaint alleges that MCI used false and misleading advertising for its "Five Cents Everyday" calling plan and other services. The complaint also alleges that MCI billed customers monthly for services not specifically authorized, such as an "800" number, in an illegal practice known as cramming and used deceptive practices to switch the long-distance and local toll services of consumers in an improper practice known as slamming.

The complaint seeks more than $20 million in penalties, court-ordered restrictions to prevent MCI from further false and misleading advertising and unfair business practices, and other equitable relief.

According to the complaint and contrary to the company's advertisements, customers who signed up the "Five Cents Everyday" calling plan paid MCI more than a nickel a minute for long-distance telephone calls after adding various fees. MCI charged customers in the plan a monthly fee of between $1.95 and $4.95; a minimum monthly charge of about $5; and a so-called carrier access charge, which could be as much as $1.46 a month, regardless of whether the customer made any long distance calls under the calling plan.

Also contrary to advertisements, the 5-cent a-minute rate was not available for long distance calls made within California and the advertised rate was not available "every day." The advertised rate was restricted to weekends and week nights between 7 p.m. and 6:59 a.m. the next morning. Additionally, MCI imposed a "Federal Universal Service Fee" of as much as 7.2 percent of the customer's monthly bill for state-to-state and international long distance calls. However, there is no requirement by the federal government to collect such a fee from telephone customers and the federal government does not set the amount of the fee MCI chooses to charge its customers.

The complaint alleges the company failed to disclose or adequately disclose the real rates or restrictions on MCI's "10-10-321" Dial-Around Long Distance service; "10-10-9000" Directory Assistance Service; and, Bonus Frequent Flyer Miles program for new customers who switched from another long distance provider.

The "10-10-321" Dial Around Long Distance service was promoted to customers as a way to save up to 50 percent off by dialing the MCI access code instead of using another long distance service. The complaint states that the service was advertised as an eight-cents-per-minute plan with "no restrictions – all day, everyday, anytime". However, the rate actually was restricted, and consumers were not adequately informed that the rate applied only to interstate calls that lasted longer than 10 minutes.

The "10-10-9000" service was advertised and sold as a way for customers to "get any phone listing in America." However, MCI's database does not contain every telephone listing in America and customers were billed for requests made even if the listing could not be located. Customers also were billed at MCI's casual billing rate, which was significantly higher than rates charged under a long distance calling plan.

The complaint also alleges that MCI failed to adequately maintain and staff required toll-free consumer hotlines to respond to customer questions and disputes. The complaint noted that MCI used customer service representatives who were deceptive, abusive and rude to customers, sometimes putting customers on hold for more than an hour or disconnecting consumer calls.

California consumers with complaints about MCI can contact the California Public Utilities Commission at 1-800-999-7392, or the Attorney General's Public Inquiry Unit at 1-800-952-5225. Written complaints should be addressed to: CPUC Consumer Services Division, 505 Van Ness Avenue, San Francisco, CA 94102, attention: James Howard.