FCC fines Michigan firm $2.3M for improper phone service switching

Washington — The Federal Communications Commission on Thursday said it fined a Michigan-based phone company $2.32 million for switching the phone service of customers without their permission and for deceptive marketing practices by its telemarketers.

The FCC's investigation concluded that because the switch was not authorized, the resulting charges on the phone bill amounted to what is called "cramming" — the practice of placing charges on a consumer's bill without permission, which is also a violation of the federal Communication Act.

The FCC's investigation into the Waterford-based Long Distance Consolidated Billing Co. dates to at least 2015 and included a review of more than 70 complaints filed against the company by consumers, many of which were small businesses.

The customers alleged that representatives from Long Distance Consolidated Billing misrepresented themselves or the nature of their sales calls when marketing its long-distance phone services, according to the FCC.

The agency's Enforcement Bureau probe included interviews with consumers, subpoenas and an examination of documents provided by the company. 

Investigators said they found telemarketers had pretended to be the consumer's existing phone company to "trick" the business or consumer into switching providers, according to a copy of the fine.

"This deception, as well as the unauthorized switch itself, violate the Communications Act," the FCC said in a statement. 

Long Distance Consolidated did not return a call Thursday seeking comment. 

The FCC in 2015 had unanimously proposed fining the company $2.4 million, but later decided to reduce the penalty by $80,000.

The company had argued to the commission that its telemarketers acted beyond the scope of their authority when making misrepresentations to consumers, and that holding the company liable for the "improper" sales pitches of said telemarketers presented First Amendment free speech problems. 

Long Distance Consolidated also claimed it wasn't responsible for the conduct of third party telemarketers acting on its behalf, and that the proposed fine was excessive and disproportionate to the company's ability to pay it. 

The commission disagreed and upheld its decision, citing a "preponderance of the evidence" that Long Distance Consolidated made misrepresentations to 11 consumers and placed unauthorized charges on 23 consumers’ telephone bills.

mburke@detroitnews.com