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Regulators fine Pac Bell $25.6 million for deceptive marketing

By Karen Gaudette Associated Press Writer
Friday September 21, 2001

SAN FRANCISCO — California regulators fined local phone service giant Pacific Bell nearly $25.6 million Thursday for allegedly marketing products to customers in a deceptive manner. 

In a 3-2 vote at the Public Utilities Commission’s meeting Thursday, the PUC ordered the company to first help customers with their service requests before trying to sell them new services and products. 

While commissioners praised workers for their “excellent customer service,” they did not hold back criticizing the company’s marketing strategies. 

“Pacific Bell turned customer service representatives into sales agents,” said PUC Commissioner Carl Wood. 

Pac Bell spokesman John Britton said the company followed commission rules, and plans to challenge the PUC’s decision. 

“We will fight on every front to overturn this unjust decision,” Britton said. “It’s a ruling that’s anti-consumer, anti-labor and anti-business.” 

Britton said the order restricts customer service workers from earning more than 5 percent commission for sales they make, which violates Pac Bell’s collective bargaining agreement with its employees. 

“You have to ask yourself whether this harms California’s economy,” Britton said. “You have to think twice about growing and investing in such an arbitrary regulatory environment. We followed every rule.” 

Though commissioners disagreed on the size of the fine, all said Pac Bell needed to change how it interacts with its more than 10 million customers. 

When describing service options to customers, Pac Bell now must begin with the least-expensive choice, rather than offering the most-expensive choice first. 

Pac Bell also must tell tenants that landlords are responsible for indoor wire maintenance. The phone company had marketed a wire maintenance package to tenants, even though landlords are required by state law to maintain internal infrastructure. Britton said Pac Bell discontinued such practices years ago. 

“Clearly, millions of customers were affected by these practices and do not have the option of switching to another provider,” Wood said. 

Alisha DaVault, a Pac Bell business services representative, said the company only was trying to show customers all of the service options. 

“I think a lot of the things (PUC commissioners) have said have been blown out of proportion,” DaVault said. 

Pacific Bell is a unit of San Antonio-based SBC Communications. SBC operates in 13 states and is the nation’s second-largest local phone company.