When Keith Ross noticed his monthly local phone bill approaching $150 with nearly 800 calls logged, it took him a fair amount of digging to determine that his choice of Ameritech services was responsible.
His voice mail was piling up hundreds of local calls that were being billed at a dime apiece by his “CallPack” Ameritech service package.
“Picking a CallPack plus voice mail is a lethal combination,” said Ross, an attorney who lives in Highland Park. “It counts as a local call when a message goes into voice mail and as a local call when you access it. I dropped voice mail and got an answering machine, and my bill went back to $85.”
Ameritech’s aggressive sale of such combination phone-service packages has drawn fire from a watchdog group and scrutiny from Illinois regulators. The Cook County state’s attorney’s office is also conducting a preliminary inquiry into Ameritech’s sales techniques.
The question is whether Ameritech’s sales methods violate Illinois law, and if they do, what authorities will do about it.
In other areas, practices at companies owned by Ameritech’s parent, San Antonio-based SBC Communications Inc., have also led to consumer complaints. In California, a presiding hearing officer for the state Public Utility Commission recently recommended $44 million in penalties against SBC’s Pacific Bell unit for “marketing abuses” in the sale of phone services. The utility commission is expected to rule on that recommendation within a month.
But California has highly specific rules on telephone sales, prohibiting salespeople from misleading customers, requiring that customers be provided with enough information to make informed decisions and even stipulating how salespeople must discuss the optional phone services they suggest to customers.
Illinois’ standards, meanwhile, are more general. The law governing telephone sales in this state is a consumer-fraud statute that says companies cannot mislead customers or say things that create the likelihood of confusion and misunderstanding.
Even under this statute, says James Speta, an assistant law professor at Northwestern University who specializes in telecommunications, the ICC has sufficient power to act if it chooses to. “If the ICC were convinced this was a consumer fraud issue,” said Speta, “I think the commission has more than enough authority to do something even without the specific laws in this area that California has.”
The state’s attorney’s inquiry, meanwhile, is at an early stage and is intended to determine whether a full-scale investigation is warranted. Where it might lead is not known yet, said Marie Spicuzza, an assistant state’s attorney.
“There clearly is overlap between the Commerce Commission’s authority and the authority of the circuit court under the consumer fraud statute,” said Spicuzza. “We’re reviewing the matter at the moment.”
At the heart of the matter are allegations by the Citizens Utility Board, a Chicago-based consumer group, that Ameritech, since its acquisition by SBC last year, has stepped up pressure on salespeople to push expensive phone services. Martin Cohen, CUB’s executive director, cites an internal Ameritech memo to its salespeople, in which the company says they must push optional services during phone conversations with customers.
In a complaint to the ICC, CUB asks the commission to order Ameritech to halt misleading sales practices by its representatives.
“They give these packages names like Best Value Package to make people think they will save money,” said Cohen. “But this is just a scheme to fatten the company’s bottom line by spreading confusion among customers and making them agree to plans they don’t need.”
Ameritech strongly disagrees with that characterization. “Our best interest is to not mislead anybody, because a dissatisfied customer won’t stay with Ameritech,” said Brian Kyhos, an Ameritech spokesman. “All telecommunications companies are moving toward product packaging. But we don’t mislead anyone.”
In the case of voice mail, Kyhos said customers get letters explaining that incoming calls will count as local calls against their account. Ameritech is cooperating with the state’s attorney’s inquiry and expects that its practices will be found to be proper and legal, another company spokesman said.
CUB, in pressing its complaint against Ameritech, is benefiting from groundwork done by consumer advocates in California.
Michael Shames, executive director of the Utility Consumers’ Action Committee, which filed the California action against PacBel, said his group worked for a year to make its case. “We’ve learned a lot about SBC practices that CUB won’t have to discover on its own,” Shames said.
A spokesman for PacBell, John Britton, said that he expects that the $44 million in penalties will not be affirmed by the California regulators as suggested because his company’s marketing practices specifically follow state regulations to the letter.
“We’re following the rules,” Britton said. “How can they second guess you and levy a fine when you’re following rules they approved?”
Here in Illinois, CUB’s complaint to the ICC is intended to push the commission into asserting its authority to prevent Ameritech from misleading customers, Cohen said.
And even though it has yet to hear CUB’s case, the ICC has already acknowledged some authority over Ameritech’s consumer marketing practices. When it approved SBC’s takeover, for instance, the commission nodded to allegations stemming from the California case.
“The commission will not tolerate misleading, deceptive or otherwise improper sales and marketing practices by telecommunications carriers in Illinois,” the ICC merger order said.
Among the ICC’s options are extensive hearings similar to those held in California, at which PacBell employees testified about pressure to sell company products. But Speta of Northwestern suggested the ICC might take another approach.
“They could hear the complaints and then say that based on the evidence it’s probable there are some misleading practices,” he said. “But instead of penalizing anyone, the commission could just adopt a set of rules intended to prevent any misleading sales practices in the future. “These rules would apply to all telecom companies, not just Ameritech. I would bet that this is what the commission will do.”
