Attorney General Distributes Refunds To Customers Of Bankrupt Long Distance Provider

Attorney General Spitzer announced today that his office will distribute $50 refund checks to nearly 400 New York consumers who filed complaints against the now-bankrupt long distance company Long Distance Services, Inc. (LDSI). New York and eight other states were involved in an investigation into the company's business practices, including "slamming," -- the illegal switching a customer's long distance service without consent. The distribution of the refund checks began last week.

After receiving hundreds of complaints from residents of New York City, Long Island and Westchester, the Attorney General's office began an investigation in 1996. In addition to slamming, the complaints included LDSI's failure to disclose its identity on consumer phone bills and its inadequate responses to service complaints. In 1997, before the New York investigation concluded, LDSI filed for Chapter 11 Bankruptcy protection. In Georgia and Alabama, several individuals filed lawsuits against the company for its illegal conduct. The lawsuits were eventually granted class action status in Alabama. New York, the other states and counsel for the plaintiffs in the class action case began negotiations with the company's former principals, and those discussions continued even after the bankruptcy was converted to a Chapter 7 Bankruptcy in 1999 and LDSI was dissolved.

"Whenever a company files for bankruptcy, consumers tend to be among the last creditors in line. I am very pleased that we were able to recover some restitution for the hundreds of New Yorkers who filed complaints," Spitzer said.

The case was handled by Assistant Attorney General Enver Acevedo of Attorney General Spitzer's Telecommunications and Energy Bureau.

In addition to its enforcement efforts, Spitzer's office has issued tips for consumers who wish to learn more about "slamming" and how to avoid it:

How Do I Know If I Have Been Slammed?

You may not be aware that you have been slammed until something looks different on your monthly telephone bill(s), so always carefully review your bill(s). If you see changes on your monthly bill(s) (such as the name of a new carrier, a $5.00 carrier selection charge, a new billing company name, or higher than usual service charges) or if you receive a separate bill from an unfamiliar carrier, you may have been slammed.

What Can I Do To Avoid Being Slammed?

You can take steps to minimize the risk of an unauthorized carrier switch. Begin by checking with your local telephone company to confirm that you are still a customer and that your chosen regional and long distance carrier(s) is/are still servicing your telephone line. If so, ask your local telephone company to "freeze" your carrier(s). Freezing your carrier(s) means that your local telephone company should not make a carrier switch until you verify that the switch has your approval.

If you do not freeze your carrier(s), your local telephone company can switch your long distance carrier just on the word of a carrier that wants to take over your long distance service. A carrier that places an order to switch your long distance service is supposed to obtain your permission. However, sometimes carriers make mistakes; others send in switch orders that they know or should know are unauthorized.

What Can I Do If I've Been Slammed?

If you discover your telephone company has been changed without your permission:

  1. Call your original authorized carrier (local, regional or long distance) to inform them of the slam. Tell them that you want to be reinstated to the same calling plan you had before the slam.

  2. If your regional and/or long distance service was switched, you should also call your local carrier to tell them to expect a transfer order from your chosen regional and/or long distance carrier, to ensure that your local telephone company connects the carrier to your telephone line. Additionally, tell your local carrier that you want all "change of carrier charges" (charges for switching companies) removed from your bill.

  3. Call the slamming company to inform them of the slam. If you have not paid its bill, tell them you will not pay for the first 30 days of service following the date of the slam.

  4. File a complaint enclosing copies of supporting documents (such as bills, etc.) to:

Attachment:

Informal Complaints Branch
Federal Communications Commission
445 12th Street, S.W.
Washington, D.C. 20554
Bureau of Consumer Frauds and Protection
Office of the New York Attorney General
120 Broadway, 3rd Floor
New York, NY 10271
  
Consumer Services Division
NYS Department of Public Service
3 Empire Plaza
Albany, NY 12223
 
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