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Telecommunications Group of DWI

The Telecommunications Group of DWI owns and Operates several local telephone companies. One service that DWI provides to its commercial customers is the use of "900 numbers" by which third-parties (clients of DWI customers) receive products & services. Billing for these products and services is delineated as charges owed to DWI instead of the business provider (e.g. Dudes with Dough, Lonely College Co-Eds, Madame Marie - Psychic to the Stars, etc.) and often blends into the small-print of phone bills and is overlooked by spouses, parents, and persons other than the third party user who might have access to the bill.

DWI owns and operates Appalachian Bell, the local service provider for the mountain areas of North Carolina and Tennessee. You've just received a letter from Dewey Cheatham, Esq., who represents Ma & Pa Kettle of Mountaintop, NC. About a month ago, an employee in DWI's accounts receivables department called the Kettle home regarding the $500.00 Delinquency on their phone account and attempted to collect the debt. The Kettles denied any knowledge of anyone using these services and refused to pay the charges.

Further investigation revealed that the phone calls to the dating hotline made from the Kettle phone were made by the Kettle's 12 year old grandson and some of his friends, who often spent weekends with them. What are the public law and private law implications of this scenario? Make a recommendation to the DWI Board as to policies it should implement to address future problems.

There are liabilities and responsibilities for both sides of this issue - please assist with both sides of the aspect.

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900-Number Rip-Off

Ma & Pa Kettle have been fleeced to the extent of $500 because of the abuse of 900 numbers that have been used from their house by their 12 year old son, and some of his minor friends.

While there are legitimate 900-numbers being used to promote products and services, many businesses have also become targets of telemarketing scams involving 900-numbers. XYZ company's callers to telephone numbers with prefixes such as 900, 976, and 540 may be charged anywhere from 50 cents a minute to 50 dollars a call. Furthermore, many 900-number scam operators hike their profits by putting callers on hold or otherwise prolonging the call to multiply their per-minute charges.

Ma & Pa Kettle could have been charged thousands of dollars charged to their telephone bills when children have been targeted with prerecorded telephone messages promising that a hot service or some other desirable service is just a telephone call away. Typical scams have involved TV ads and recorded telephone messages promising services, such as:

· Real estate or job listings. Callers usually end up paying to listen to a recording of listings taken from local newspapers or other publicly available sources.
· A "gold" credit card. Often these so-called gold cards can be used only to buy over-priced merchandise from the promoter's own catalog-and there may even be an extra charge for obtaining the catalog.
· A bank credit card, available "regardless of credit history." All the caller usually receives is a list of banks offering low interest or secured credit cards. The list the caller receives, usually for a very high price, often can be obtained at far less cost through financial magazines, newspapers, or legitimate credit organizations. In another typical scam, the caller may be sent a "how- to kit" of virtually worthless generic information on reestablishing credit.
· Bank loans. Again, the caller usually receives nothing but a list of lenders, or a generic information package on applying for a loan.
What Ma & Pa Kettle needs to do:
· Your best defense against excessive 900-number charges is to establish the facts regarding telephone use and make sure DWI knows of it.
· Children should be briefed on 900-number scams and when out of house, 900-numbers should be barred.
· Also make sure children know what a 900-number call will cost before dialing, since federal law requires such disclosures.
· Remember, it is possible to adjust telephone systems so that outgoing 900-number calls cannot be made. However, blocking 900 or 976 numbers does not restrict unauthorized calls to 800 or international numbers.

DWI should implement the "The 900-Number Rule"
This Rule was implemented by the FTC to fight abuses regarding the advertising and use of 900 numbers by services selling information or entertainment programs delivered over the phone, and billed to the caller's phone bill. Effective since November 1, 1993, it applies to interstate calls to such services. Companies that violate this Rule may be subject to fines of $10,000 per violation, if the FTC takes action against them.

Legal protection that Ma & Pa Kettle can avail themselves of:
The phone company cannot disconnect your regular or long distance service if you don't pay a 900-number charge. However, you could be blocked from making future calls to 900 numbers if you don't pay legitimate 900-number charges. Blocking is available from the phone company if you want to make sure no one using your phone can call a 900-number service-charges ...