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PA. OFFICE OF ATTORNEY GENERAL

NEWS RELEASE ISSUED

Thursday, Aug. 27, 1998

CONTACT: Press Office 717-787-5211

California Billing And Collection Company To Pay $25,000

HARRISBURG -- Attorney General Mike Fisher today announced that a California-based billing and collection company will pay $25,000 to settle alleged violations of state and federal law in the handling of pay-per-call telephone charges.

Fisher said his Bureau of Consumer Protection entered into an "Assurance of Voluntary Compliance" agreement with American Billing & Collections, Inc., doing business as American Billing Companies, Canoga Park, California. The settlement resolves alleged violations of Pennsylvania's Consumer Protection Law and Debt Regulations and Federal Pay-Per-Call Rules. The Federal Trade Commission obtained a preliminary injunction against American Billing & Collections and related companies last April.

According to investigators, the company billed and then attempted to collect payments for pay-per-call services from parties other than the actual "user" of the service. The pay-per-call services were provided by Interactive Audiotext Services, which offer special phone lines for informational or entertainment purposes, including psychic lines and daily horoscopes.

According to the Commonwealth, consumers accessed the pay-per-call services through an 800 toll free number. A recording then instructed the callers to provide a credit or debit card number to pay for the services. If the credit or debit card given did not honor payment of the charges, American Billing used a form of "Caller ID" to obtain the telephone numbers and addresses of the homes from where the calls allegedly had been made. Then, in violation of the law, the company directed collection efforts to the telephone subscribers rather than the party that used the services.

"Under the law, all 800 number pay-per-call charges must be billed to the person accessing the services, not the person whose phone line was used to make the call," Fisher said. "Dozens of consumers who disputed the charges told my office they never used the services or authorized payment for these calls."

Fisher noted that in one case, a consumer was billed $1,532.20 for calls he claimed he never made.

"Many of these consumers asked their local phone companies to place 900 number blocks on their telephones to protect themselves from pay-per-call charges and to prevent their children from accessing these services. However, the blocks were not effective in this situation because the services were accessed through 800 numbers," Fisher said.

It is also alleged that the company:
falsely told consumers that as telephone subscribers they were responsible for pay-per-call charges that appeared on their phone bill.
failed to inform consumers of their right to dispute debts.
failed to provide consumers with verification for disputed charges.-3-
abused or harassed telephone subscribers in connection with the collection of pay-per-call charges.

Under the terms of the agreement, American Billing does not admit any wrongdoing and agrees to provide refunds or make adjustments to consumers' bills if the charges were improperly billed. In addition, the company agrees to:
only attempt to collect debts from the person who used the services.
provide mandatory debt disclosures and consumers' right to dispute debts.
refrain from falsely representing that legal action can be taken.
refrain from using deceptive means to collect or attempt to collect any debt.
comply with state and federal laws regarding debt regulations and Pay-Per-Call Rule.
take corrective measures to clear consumers' negative credit reports resulting from any improper debt collections.
pay $25,000 to the Commonwealth for the costs of investigation and future public protection purposes.

Fisher warned that if consumers are billed for telephone services they didn't authorize, they should first dispute the charge and demand verification of the charges in question.

The settlement was filed in Commonwealth Court by Senior Deputy Attorney General E. Barry Creany of Fisher's Bureau of Consumer Protection Office in Ebensburg.