NEWS RELEASE
Office of Maryland Attorney General J. Joseph Curran, Jr.


February 21, 2002 Media Inquiries: Sean Caine 410-576-6357

LONG DISTANCE CARRIERS AGREE TO DISCLOSE
EXTRA COSTS AND FEES TO CONSUMERS

Attorney General J. Joseph Curran, Jr. today announced that his Consumer Protection Division, along with those of 23 other states, reached an agreement with three major long distance carriers over the carriers’ advertising of their discount long distance plans. AT&T, MCI Worldcom, and Sprint agreed to disclose the extra costs and fees that go along with the advertised rate of their discount long distance plans, resolving a two-year inquiry by the states into the carriers’ advertising practices.

The states had alleged that the carriers were advertising long distance service at a cents-per-minute rate without adequately disclosing all the extra fees a consumer would have to pay to take advantage of the offer. After all the fees were included, the consumer would pay much more than the advertised per-minute rate.

The states alleged that in some instances the carriers did not disclose some fees, or failed to tell consumers clearly that the rates were only good on certain days of the week, certain hours of the day, or for calls between states (as opposed to calls within the consumers’ home state), and that the rates for calls that did not fall into those categories were much higher.

"It’s deceptive to promote a low price for service and then pile on undisclosed fees. This agreement will make it easier for consumers to understand the total cost of a long-distance calling plan before they agree to sign up for it," Curran said.

AT&T, MCI Worldcom, and Sprint all deny any wrongdoing, but have agreed to pay a total of $1.5 million to the states. In addition, the carriers have agreed to make certain disclosures to consumers that reveal the total cost of the long distance service they are offering, with the exception of taxes that the carriers are required by law to pass on to their customers. For example, if a carrier is offering state-to-state long distance for five cents per minute, but in order to take advantage of the offer, consumers must also pay a $4.95 monthly fee, a Universal Service Fund fee, and additional state-specific fees which the carrier chooses to pass on to its customers, the carrier must disclose all of this information in its advertising in a clear and conspicuous manner.

The carriers agreed that their advertisements would not represent a rate for long distance service unless the advertisement clearly discloses all material terms, including:

• where the rates apply (state-to-state or in-state);
• that in-state rates may be higher, and that additional in-state fees may apply;
• when the rates apply (time or day restrictions);
• in the case of a temporary promotion, the date the temporary promotion will expire;
• the billing method a consumer is required to use in order to obtain the rate;
• any requirement that the consumer subscribe over the Internet; and
• other services that must be purchased in order to obtain the rate.

The states participating in the agreement are Arkansas, Connecticut, District of Columbia, Georgia, Idaho, Illinois, Iowa, Kansas, Maine, Maryland, Michigan, Nevada, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Tennessee, Texas, Vermont, and Wisconsin.

 

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