Sunday, October 25, 1998

New Jersey telephone company settles with 20 states for $1 million

By JUSTIN HYDE

Associated Press

DETROIT -- Twenty states will divide a $1 million payment from a New Jersey phone company that changed customers' long-distance service without their permission.

The settlement against Minimum Rate Pricing Inc. is one of the largest ever paid by a company for the practice of phone "slamming." The deal announced Friday also requires MRP to change its business methods and settle bills with customers.

"The high penalty assessed in this case should send a clear message that 'slamming' will not be allowed in Michigan or in the nineteen other states that joined forces to stop this practice," said Michigan Attorney General Frank Kelley.

In a statement, an MRP officials said the company had stopped the practices cited by the states, but settled the complaints to save money.

"If state officials are truly are interested in consumer protection, it is unfortunate that they are reluctant to focus their energies on the documented offenses of the large carriers who service tens of millions of American citizens," MRP Vice President Drew Keena said.

Kelley said that MRP had not only slammed customers, but held onto them illegally. He said in one case, MRP claimed to have secured the right to switch phone service from a man who had been dead for several years.

Other consumers complained that after switching back to their old long distance company, MRP would slam them again.

The settlement also requires the company to send notices to all consumers who were switched to MRP before Jan. 1, 1998, alerting them that they are entitled to have their MRP charges recalculated as if they had not been slammed. MRP must also refund all switch fees incurred by customers.

The other states involved include: Arizona, Arkansas, Idaho, Illinois, Indiana, Iowa, Kansas, Minnesota, Nebraska, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, Texas, Vermont, Virginia and Washington.

The Federal Communications Commission has said slamming accounts for the largest number of telephone-related complaints it receives. The FCC has fined one long-distance company $5 million for slamming, and had fined a Texas company slightly more than $1 million.

The FCC said Friday that it had fined MRP $80,000 in 1997 for slamming two customers, and was investigating the company.