The CPUC, following a thorough investigation of consumer complaints about unauthorized charges and incorrect rates on phone bills, has approved a Settlement Agreement between Americatel and the CPUC’s Consumer Protection and Safety Division (CPSD) that protects consumers against fraudulent marketing practices and faulty billing systems.
Under the settlement, Americatel will pay a fine of $503,000 to the state’s General Fund in addition to the $1.5 million Americatel had to refund to its California customers (or $1.9 million nationwide) due to unauthorized charges. CPSD determined that Americatel had crammed (placement of unauthorized charges on a consumer’s telephone bill) 61,097 California consumers as a result of the forgery of Letters of Authorization by its marketing agent, Bravo Marketing of Florida.
In the course of its investigation, CPSD also found that Americatel overcharged its customers $2 million in Universal Service Fund fees due to billing errors. Americatel acknowledged the mistake and immediately issued refunds to customers. CPSD faulted Americatel for its failure to perform adequate due diligence in overseeing its marketing activities and billing system.
Americatel is a reseller of long-distance intra-state, inter-state, and international telephone services, primarily to Latino customers seeking connections to Central and South Americas. In the spring of 2008, Americatel contracted with Bravo Marketing to market its long-distance calling services to consumers. Shortly thereafter, the CPUC began receiving a large number of consumer complaints about unauthorized charges by Americatel. After being contacted by the CPUC, Americatel reported that it had received large numbers of complaints from consumers who claimed to have been enrolled in one of Americatel’s plans without their authorization. Americatel determined that Bravo Marketing committed widespread fraud on many Americatel customers by forging Letters of Authorization.
Americatel terminated its marketing agreement with Bravo Marketing in June 2008. It did not bill customers signed by Bravo Marketing in July 2008 or thereafter, and gave credits to every customer Bravo had signed up, including some who had legitimately signed up and used the service.
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