Subject: [NEXTEL-1] Nixon sues cell phone companies over billing for 911

From: Marcel <[email-masked]>
Date: Fri, 06 Dec 2002 01:04:40 -0500

Nixon sues cell phone companies over billing for 911
BY MICHAEL D. SORKIN Of the Post-Dispatch

12/05/2002 12:00 AM

Missouri Attorney General Jay Nixon sued Nextel and Sprint on Thursday to stop the two big
cell phone companies from adding fees to customer bills that look like taxes but aren't.

"Bills need to be honest, direct and understandable," Nixon said.

Another reason for the suit, he said, is to discourage other cell phone companies from
adopting similar deceptive billing practices.

Nextel and Sprint charge separate fees for emergency 911 services - services that aren't
yet available here. When they are, your cell phone will tell emergency dispatch operators
where you are if you call for help.

Nextel charges most of its 10 million customers $1.55 a month for 911 service and two
other government-mandated services.

Sprint adds a 2 percent charge to the bills of its 14.5 million customers for the same
three services.

In customer bills, Nextel calls its fee "federal programs cost recovery" and lists it
under "taxes, fees and assessments."

In its bills, Sprint calls its extra charge "USA regulatory obligations fee."

In the suit filed in St. Louis Circuit Court, Nixon accuses the two companies of failing
to include the extra fees in their monthly advertised rates - and tricking would-be
customers into thinking that their rates will be lower.

"This deception makes it more difficult for customers to shop around and find the true
best price," the suit says.

The suit says the practice violates Missouri's unfair merchandising law barring deception.
The attorney general's office is seeking unspecified civil fines and is asking a judge to
issue a temporary restraining order until the billing practice is permanently banned.

Judge Thomas Grady set a hearing for 2 p.m. today in St. Louis Circuit Court to hear
arguments on a restraining order.

Nextel has vigorously denied that its bills are deceptive. The company has said it
notified customers a month before adding the fees in January, and never claimed they were
a tax. The company did not return calls Thursday.

A Sprint spokesman said he had no comment on the suit. He defended the wording of the
extra fees, saying the government requires cell companies to provide the services.

Legal and research experts say they believe this is the first time a prosecutor or
government regulator has sued cell phone companies over the billing practice. In August,
civil attorneys in Jefferson City filed a class action suit against Nextel after the
Post-Dispatch reported the practice.

Nixon's suit says the state isn't trying to regulate cell phone rates. Under federal law,
cell phone companies can increase rates without having to ask either U.S. or state
agencies.

Instead, the state suit seeks to ban what it calls the deceptive billing and advertising
practices.

Because the bills are almost impossible to understand, the suit says, "most reasonable
customers" probably assume that the extra fees are taxes that apply to all cell phone
companies, rather than charges that Nextel and Sprint have chosen to impose.

The deception also keeps customers from knowing that they have the right to cancel their
contract, the suit says. When monthly rates are raised, customers can cancel their cell
contract. But since the customers are duped into thinking that the increase is a tax, they
never get that chance, the suit says.

The suit says the companies can avoid deception by adding the costs of complying with
federal regulations into their basic rate structure "as is typically done with overhead
costs."

If the companies don't want to do that, the suit asks the judge to order them to stop
placing the fees under the category of taxes. The cell companies also should make it clear
in their ads that the extra fees aren't taxes, the suit says.

Nextel has said that customers can cancel if they object to the added fees. But several
customers who read Nextel's comment in an article last month called the Post-Dispatch to
say that Nextel wasn't honoring the promise.

One customer, Kelly Halaska, called a Nextel supervisor who offered to cancel the contract
only if Halaska paid an extra $200.

Nextel is the fourth-largest cell phone company and Sprint is the fifth-largest. The three
largest cell phone companies - Verizon, Cingular Wireless and AT&T Wireless - do not add
separate fees for 911 emergency services.

Reporter Michael D. Sorkin: E-mail: [email-masked] Phone: 314-340-8347

http://www.stltoday.com/stltoday/news/stories.nsf/news/934743707A24BA5386256C8700181427?OpenDocument&highlight=2%2Cnextel&headline=Nixon+sues+cell+phone+companies+over+billing+for+911

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