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CONSUMER BULLETIN FROM THE OFFICE OF FLORIDA ATTORNEY GENERAL CHARLIE CRIST OCTOBER-NOVEMBER 2006 TELEPHONE TROUBLE Consumers encounter invasions of privacy, unexpected switches in services and unauthorized Settlement ends extra charges price-fixing case Like practically every other 13-year-old girl, she wanted a An investigation into price fixing after cell phone. And Dad was happy to oblige, after the phone Hurricane Dennis in 2005 ended with a company told him it would cost only $30 a month. settlement in which the former owner of Imagine his surprise when the first bill arrived, and it said gas stations in Northwest Florida agreed $180. to pay $140,000 in fines and costs. “There were 50 pages of charges,” says Assistant Attorney Robert Tate had General Tina Furlow. “He called the company and they required the buyer of IN said she’d been downloading. She’d been to a sleep-over, one of his stations to and her friends told her to download things.” match the prices at THE stations he still owned With phones in the hands of virtually everyone nowadays, NEWS it’s no wonder that consumer-protection lawyers at the in violation of anti- trust and deceptive- Florida Attorney General’s Office are investigating a record practices laws, number of cases about phone service. according to a lawsuit filed by the Trickery associated with phones ranges from plain old- Attorney General in May. fashioned impersonation, through the perennial scam of Tate will cooperate with the Attorney charging money for nothing, to new-fangled manipulations General during ongoing litigation against using advanced technology. other defendants who allegedly fixed as Whether it’s pretexting, slamming or cramming, what the prices. Two other people, including the schemes have in common is that they are profitable. buyer of Tate’s station, have already settled allegations in the case. “It may not be a lot of money per person,” says Assistant Attorney General Keith Vanden Dooren, “but it’s millions of The settlement also requires Tate to pay people. I mean, everybody’s got a phone.” $100,000 in civil fines, the statutory maximum, and he must refrain from There’s nothing new about some of the sneaky tactics. “A SEE “NEWS,” PAGE 4 SEE “PHONES,” PAGE 2 “PHONES,” FROM PAGE 1 lot of these scams have been around for hundreds of years,” Vanden Dooren says, such as pretending to be someone you’re not. Earlier this year, the Attorney General filed suit against a Tamarac company suspected of impersonating phone customers to obtain their personal information. Often called “pretexting,” this technique can be used to turn up, among other things, damaging evidence in divorces or inside information in business rivalries. “It’s a privacy issue,” Vanden Dooren says. On its websites,1st Source Information Specialists advertised that for a price it would provide phone records, according to the lawsuit, and buyers could get the records just by providing the phone number of anyone they were interested in. Then 1st Source allegedly deceived phone companies by impersonating either customers or company employees in order to obtain the personal information. In April, a similar case brought by the Attorney General against Global Information Group, of Temple Terrace, ended with a court judgment closing down the business. Consumers get ‘slammed’ with new long distance... Meanwhile, “slamming” -- or switching customers from one long distance service to another company’s without their approval -- continues. In its latest incarnation, slamming can occur when customers change their service by, say, adding minutes to their cell phone plans. Little do they realize that their land-line long distance is affected. Thanks to vigorous law enforcement and some industry self-policing, slamming was on the decline compared to a few years ago. But now it’s back, because telecommunications companies see a future in which myriad services, from phone to television to Internet, are linked. Competition to be consumers’ primary provider is intense. “They want the whole package,” says Investigator Sarah Kirchberg. Another deceptive practice that was common in the late 1990s is also back in a new form. … And ‘crammed’ with extra charges “Cramming” takes place when unauthorized charges appear on customers’ phone bills. Under federal and Florida law, extras can be added to phone bills -- as long as the consumers have approved them. In the past, unauthorized extras were clearly related to phone services. But now there’s a trend for all kinds of unusual items to pop up on bills, such as shopping discounts and coupons. Companies are emerging all over the country that seek to put charges on phone bills for online dating, music downloads and similar services. In September, the Attorney General sued Email Discount Network, alleging that the Plantation company charged consumers on their phone bills without their approval. The company induced thousands of consumers to reveal their phone numbers on a website offering discounts and coupons, and consumers did not even get the services the company promised, according to the lawsuit. At the same time, the Attorney General and the Florida Office of Public Counsel asked the agency that regulates telecommunications in Florida to take another look at its laws about which kinds of charges can be on phone bills and which cannot -- and to conclude that companies such as Email Discount Networks cannot. New technology creates challenges Still more phone-related practices are under investigation. Attorney Furlow is learning about songs like “Hey U Nasty Girl” and “I Need a Hot Girl.” These are among thousands of steamy tunes on websites including Jamster.com and Blinko.com -- along with games, wallpapers, ringtones, animations and videos. The products are marketing in media directed at youngsters. “A lot of underage people are downloading these,” Furlow says, and the charges appear on the bills that their parents get from cell phone companies. “The person who gets the bill doesn’t know what’s been ordered,” she says. In other words, the charges are not authorized. “A lot of people are having trouble with this because the cell phone business is getting so big,” Furlow adds. And so far, the businesses involved aren’t inclined to limit kids’ access. New technology is creating a “Wild West out there and they don’t think they have to abide by the old rules,” she says. What’s more, as technologies merge -- with people using computers as phones, phones to watch TV and whatever else the future holds -- problems of authorization may get worse. “That’s where we’re headed,” Furlow says. “NEWS,” FROM PAGE 1 Activity that would result in non-competitive gas pricing. Tate will also pay taxpayers $40,000 for the cost of the investigation and litigation. PayPal to improve online buying practices PayPal, the online payment service, agreed to improve its business practices and pay $1.7 million to 28 states including Florida that had investigated its activities. The settlement requires PayPal to disclose terms and conditions more clearly before consumers become PayPal Office of Attorney General members and when members initiate transactions. Charlie Crist Whenever a member prepares to make a purchase, he or State of Florida she will be presented with a more explicit choice about what The Capitol PL-01 kinds of payment to use. Tallahassee, FL 32399-1050 850-414-3300 PayPal must also make it easier for consumers to access web pages explaining the difference between its PayPal Office of Citizen Services dispute-resolution programs and rights available to 850-414-3990 consumers under federal law. Toll-free Hotline 866-966-7226 The Attorney General’s Office had received more than 130 (866-9-NO-SCAM) complaints about PayPal. Consumers complained of hidden fees for sellers, misrepresentations about payment methods Economic Crimes Division and problems with default settings, which sometimes caused Consumer Protection deductions from consumers’ bank accounts even if they wanted some other method of payment. 850-414-3600 Florida’s share of the $1.7 million settlement is $144,500, Antitrust Division which will reimburse taxpayers for the cost of the 850-414-3300 investigation. Consumers have already received $9.2 million in restitution from a class-action lawsuit. Office of Statewide Prosecution Claritin manufacturer will reimburse Medicaid 850-414-3700 Pharmaceutical manufacturer Schering-Plough Corp. will give www.myfloridalegal.com $10.4 million to the taxpayer-supported Florida Medicaid program as part of a $435-million nationwide settlement with the states and the federal government. Federal investigators found that a Schering-Plough division had misreported best prices for several of its drugs to Medicaid, including the popular allergy drug Claritin, as well as other misconduct. Schering-Plough paid kickbacks to physicians to encourage them to use the company’s products, and also improperly promoted a drug approved for use on brain tumors for purposes not authorized by the Food and Drug Administration, according to investigators. .