Qwest will pay the state $1.3 million and make restitution estimated at up to $250,000 to consumers over questionable customer-service and billing practices.
The practices generated more than 7,000 complaints over the past two years, often for a tactic known as “cramming” in which the company packed features such as caller ID, call-forwarding and last-call return on top of basic phone service, increasing residential bills by about $20 a month.
Qwest representatives, motivated by sales commissions, would take an “all or nothing” approach when dealing with consumers, Attorney General Christine Gregoire said yesterday.
“In the last couple of years, Qwest has topped our list for consumer complaints,” she said at news conferences around the state yesterday, including a morning event at Boeing Field.
“Customers believe that they have been misled, mishandled and misadvised by Qwest” and were tricked into buying services they didn’t want, didn’t need and could not afford, she said.
Qwest, with about 2 million customers in the state, admitted to no wrongdoing in the deal struck last week and announced yesterday.
In a complaint filed in King County Superior Court, Gregoire accused the company of a pattern of unfair and deceptive business practices in violation of the state’s consumer protection act.
In addition to cramming, the complaint alleged that Qwest’s wireless subsidiary failed to adequately disclose the fees imposed for early cancellation of a service account and misrepresented the service’s coverage areas and the applicability of roaming charges.
In addition, the company misrepresented the availability and speed of its high-speed Internet service, known as DSL, or digital subscriber line service, the suit said.
Under a consent decree filed simultaneously to dispose of the allegations, Qwest pledged not only to compensate the state and consumers, but to make a new standard of service. Compliance will be monitored by an independent third party whose costs Qwest must cover, and breaches could cost the company $25,000 per violation, Gregoire noted.
Yesterday’s settlement comes as Qwest is in what may be the final stages of receiving approval to enter the long-distance business in Washington state. It also follows similar deals the company has made with other states.
It also comes as Qwest’s stock has plummeted, its accounting practices are under investigation by both the Securities and Exchange Commission and the U.S. Justice Department. On top of that, the company was the focus of intense consumer furor over plans this year to share sensitive customer information.
Asked if the deal with Gregoire’s office was part of an effort to salvage the company’s image, Kirk Nelson, Qwest’s president for Washington state, said:
“We believe that we are going to succeed and continue to be a great telecommunications company for our customers. Obviously, reputation is critical to that success and we know that we must work hard every day to ensure that our customers trust us and believe in the service that we provide.”
Think you qualify for a refund?
If you have already complained about Qwest to the Washington Utilities and Transportation Commission or to the state Attorney General, there’s no need to do anything. Otherwise, you can file a complaint with the Attorney General in the next 120 days. Complaint forms are available by contacting the Attorney General’s office toll free at 800-551-4636 or by visiting the agency’s Web site: www.wa.gov/ago/consumer/
Gregoire said the state’s deal with Qwest was “far better” than those other attorneys general in the West.
Last month, Qwest agreed to pay Idaho $200,000, and earlier this year it paid Oregon $575,000 to settle cramming complaints. But last summer in Colorado, Qwest agreed to pay the state $1 million and as much as another $1 million to consumers. In a related action that’s still pending, Arizona’s attorney general last year sued Qwest over deceptive business practices.
Gregoire said it was significant that Qwest, as part of the Washington consent decree, accepted terms addressing wireless and Internet service. Unlike basic phone service, both are “non-regulated” areas, but Gregoire noted she has never considered either service beyond the reach of the state’s consumer protection act.
Gregoire said Qwest is not the only offender, saying her office is talking with “everyone in the (wireless) industry” so that consumers clearly know “what the coverage area is, what the product is, and they get what they think they’re paying for.”
Gregoire said nearly 900 people told the state that when they called Qwest to complain they ended up getting transferred repeatedly, ultimately ending up with company representatives who could offer no help and instead tried to sell new products.
She attributed such experiences to a corporate culture that put little emphasis on addressing consumer complaints. A key element of the consent decree, Gregoire said, is a requirement that Qwest maintain customer service reps in Washington state and that their salaries are based on solving problems, not selling services.