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For immediate release – Wednesday, December 13, 2006.
Contact John R. Perkins -- 515-281-7021.

Consumer Advocate: Beware of Long Distance Charges by “Buzz Telecom”

Consumer Advocate and Attorney General: Older Iowans are filing complaints about unauthorized charges or changes of long distance service by “Buzz Telecom”

Des Moines.    Iowa Utility Consumer Advocate John R. Perkins and Atty. Gen. Tom Miller are urging telephone customers to check their bills for unauthorized changing of their long distance service to Buzz Telecom Corporation and for unauthorized long distance charges made by the company.

[UPDATE:  On Jan. 30, 2007, the Iowa Utilities Board ordered all telecommunications service providers in Iowa to stop billing charges to Iowa customers on behalf of Buzz Telecom, and to deny the company exchange access services.  The IUB also ordered civil penalties of $120,000.  Many other complaints remain pending.  See Iowa Utility Board news release, 2-2-07.] 

Perkins said it appears that especially older Iowans have been targeted by Buzz Telecom telemarketing calls and then have experienced unauthorized changes in service, including “slamming” (changing a consumer’s telephone service without permission) and “cramming” (charging a consumer for services not ordered, authorized or received.) Perkins said the Utilities Board has received over 115 complaints as of December 12, 2006. Almost half of those have come within the last two weeks.

Attorney General Tom Miller said: “We allege Buzz Telecom has misrepresented itself in telemarketing calls, especially by telemarketers saying they represent the consumer’s local telephone company, when that is not true. And they falsely promised savings if consumers switched their long distance service to Buzz Telecom. Those are troubling misrepresentations.”

Perkins and Miller urged especially older Iowans to inspect their telephone bills and to file a complaint with the Iowa Utilities Board if their long distance service was switched without authorization, or if unauthorized charges were “crammed” on their bill. They also should refuse to pay the bill and should resist any debt collection demands made by Buzz. Commonly, the charges billed by Buzz are $30 for activation, $10/month for the service and $20 to discontinue the service.

“This is a situation where adult children and other caregivers should consider assisting parents and other older Iowans in reviewing their telephone bills,” Miller said.

Perkins added: “Our office has filed hundreds of cases over the past five years involving slamming and cramming. People should carefully review their telephone bills every month to make sure unauthorized charges are not placed on their bills.”

Consumers should send mail to the Iowa Utilities Board, Customer Service Group, 350 Maple Street, Des Moines, Iowa 50319-0069. Send e-mail to iubcustomer@iub.state.ia.us. The toll-free number is 877.565.4450. The fax number is 515.281.5329. For an online complaint form, go to: http://www.state.ia.us/government/com/util/complaintform.html .

Perkins is head of the Office of Consumer Advocate (OCA), which is part of the Iowa Department of Justice and represents the interests of utility customers and the public before the Iowa Utilities Board. The OCA has asked the Utilities Board to assess civil penalties against Buzz. Civil penalties of up to $10,000 per offense may be assessed by the Board.

“It's been quite a few years since we've seen complaints against a company as numerous as those we are now seeing against Buzz Telecom,” Perkins said. “However, the complaints against Buzz Telecom are not unique. We have seen similar complaints against other companies for a number of years. What is needed is early and effective law enforcement across the industry. That means swift and sure civil monetary penalties as soon as violations appear and are proven. Without that, we will not see an end to the problem.”

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Background and Details:

The Utilities Board recently opened a proceeding on the first of many complaints. The OCA is asking the Utilities Board to resolve the complaints and levy a civil monetary penalty against the company. The penalty for each complaint is a maximum of $10,000. Buzz Telecom Corporation is based in Merrillville, Indiana.

Most of the complaints against Buzz Telecom are from or on behalf of older Iowa consumers. Many allege deceptive and predatory practices to obtain a change in the consumer’s long distance telephone carrier to Buzz Telecom.

Among the specific complaints are the following:

• Many allege Buzz Telecom has misrepresented itself as an agent or representative of the consumer’s local telephone company. These alleged misrepresentations have caught the consumer off-guard, as consumers are commonly familiar with, and trusting of, their local telephone companies. In reality, according to the local telephone companies, Buzz Telecom is not an agent or representative of the local telephone company.

• Many complaints allege Buzz Telecom is promising consumers savings if they switch their long distance service to Buzz Telecom. In reality, according to the complaints, there are no savings, and, in fact, the bills are higher after the switch than before, particularly if the consumer makes few long distance calls. Consumers also complain of connection and cancellation fees.

• In some cases, consumers allege Buzz Telecom has been unable to make an actual switch of their long distance service because the consumer has a “freeze” in place that prevents the switch. They further allege that Buzz Telecom has nevertheless billed them for long distance, even though Buzz Telecom has provided no long distance service.

Complaints also have been received from business customers who have had similar fraudulent solicitations from Business Options, which is a companion company to Buzz Telecom.

The unauthorized switch of telephone service is illegal. So is the billing of unauthorized charges for telecommunications services.

Consumers are urged to be wary of telemarketers who claim the company on whose behalf they are calling is affiliated with the consumer’s local telephone company. They are urged to be wary of telemarketers who promise savings if they switch their long-distance service. Consumers are also urged to inspect the telephone bills carefully to be sure the companies who are billing them are in fact authorized to bill them and that the charges for which they are billed are in fact authorized. If you believe your telephone service has been switched without authorization, or if you believe unauthorized charges for telecommunications services have been billed to your account, you should contact the Iowa Utilities Board to register your complaint. You should also withhold payment on any unauthorized charges until the complaint is resolved.

The Iowa Utilities Board is responsible for determining whether a violation of Iowa law has occurred. The Iowa Utilities Board is also responsible for assessing civil monetary and other penalties when appropriate. The Iowa Office of Consumer Advocate is a division of the Iowa Department of Justice.

Iowa Office of Consumer Advocate
310 Maple Street
Des Moines, Iowa 50319-0063
E-mail: iowaoca@mail.oca.state.ia.us
Tel. 515.281.5984
Fax 515.242.6564

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On the Web: www.IowaAttorneyGeneral.org.