before the public utilities commission f i l e ddocs.cpuc.ca.gov/efile/stp/96277.pdf · before the...
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BEFORE THE PUBLIC UTILITIES COMMISSION
OF THE STATE OF CALIFORNIA
Utility Consumers Action Network (UCAN),
Complainant,
vs.
Mpower Communications Corp. dba TelePacific Communications fka Mpower Communications aka TelePacific Holding Corp and related entities collectively “TelePacific” (U5859C),
Defendants.
C. 08-08-008
JOINT STIPULATION OF FACTS IN C. 08-08-008
UTILITY CONSUMERS’ ACTION NETWORK Art Neill 3100 5th Ave., Suite B San Diego, CA 92103 Telephone: (619) 696-6966 Facsimile: (619) 696-7477 E-mail: [email protected] Attorneys and Representatives for Complainant Dated: January 15, 2009
GOODIN, MACBRIDE, SQUERI, DAY & LAMPREY, LLP John L. Clark 505 Sansome Street, Suite 900 San Francisco, CA 94111 Telephone: (415) 392-7900 Facsimile: (415) 398-4321 E-mail: [email protected] Attorneys for Defendant
F I L E D01-15-0904:59 PM
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BEFORE THE PUBLIC UTILITIES COMMISSION
OF THE STATE OF CALIFORNIA
Utility Consumers Action Network (UCAN),
Complainant,
vs.
Mpower Communications Corp. dba TelePacific Communications fka Mpower Communications aka TelePacific Holding Corp and related entities collectively “TelePacific” (U5859C),
Defendants.
C. 08-08-008
JOINT STIPULATION OF FACTS IN C. 08-08-008
In accordance with the ruling of Assigned Administrative Law Judge Kirk
McKenzie made on the record at the prehearing conference held herein on December 1,
2008, and his telephonic ruling of January 15, 2009, granting an extension of the filing
date, Utility Consumers Action Network (“UCAN”) and Mpower Communications Corp.
(“Mpower”) hereby submit this stipulation that, for the purposes of this proceeding, the
following facts are agreed to be true:
STIPULATED FACTS
1. On June 6, 2005, Olga Kormuskina signed a service agreement (the
“Agreement”) with Mpower on behalf of Edelweiss Flowers (“Edelweiss
Flowers”) providing for Mpower’s provision of various services, including,
among other things, one DSL Internet access line and DSL modem, and three
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plain old telephone service (“POTS”) lines. Exhibit A hereto is a true and
correct copy of the Agreement.
2. Shortly after Mpower and Edelweiss Flowers entered into the Agreement,
Mpower, in accordance with its general practice, provided Edelweiss Flowers
with a “welcome kit” describing the services to be provided under the
Agreement. The welcome kit included a notice entitled “Consumer Alert re:
Fraud Resulting in International Long Distance Charges” (“Consumer Alert”).
Exhibit B hereto is a true and correct copy of the Consumer Alert.
3. On May 16, 2006, Ms. Kormuskina and Ms. Stepanova completed a “Business
Name Change Form” and an “Assignment and Assumption Agreement”
provided by Mpower for the purpose of transferring responsibility under the
Agreement from Edelweiss Flowers, which, in the meantime, had been
incorporated under the name “Edelweiss Flower Salon, Inc.” to Ms. Stepanova,
who thereafter operated the business as a sole proprietorship under the name
“Edelweiss Flower Salon” (hereinafter referred to either as the “Customer” or
“Ms. Stepanova”).
4. During the period from August 1, 2006 through August 31, 2006, a Brother
MFC 7220 combined printer, scanner, and fax machine (“fax machine”) was
connected at the Customer’s premises to one of the POTS lines provided by
Mpower. This POTS line was identified by telephone number 858-751-0376
(the “fax line”). The fax machine was also connected at the Customer’s
premises to a computer running Windows that, in turn, was connected at the
Customer’s premises to the DSL Internet access line. Ms. Stepanova asserts
that Windows Firewall and another antivirus program, which Ms. Stepanova
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believes was Norton Antivirus, was installed on the computer. The Customer
asserts that none of the Customer’s lines was connected to a PBX and that the
customer did not have voicemail; Mpower has no basis for a belief to the
contrary.
5. In early September 2006, the Customer received a billing statement from
Mpower that included charges identified on the bill as having been made from
the fax line, totaling $1,043.13 ($1148.20 after taxes, fees and surcharges) for
seventeen international calls listed as “NBR Called” “881-9900060115” and
“Place” “Iridium Sate” from August 16 through August 23, 2006. The calls
were charged at $14.67 per minute. Exhibit C hereto is a true and correct copy
of the bill.
6. The calls were completed by Mpower pursuant to its International 214 license
issued by the Federal Communications Commission (“FCC”) under File No.
ITC-214-19970731-00440. The charges for the calls were incorrectly labeled
by Mpower’s billing system as having been placed to an Iridium Satellite phone
instead of to a GlobalStar satellite phone, which was the international
destination indicated by the called numbers. Under Mpower’s published price
sheets for such calls, the billed rate of $14.67 per minute was the appropriate
rate to be charged for calls to GlobalStar satellite phones, while the published
rate for calls to Iridium Satellite phones would have been $2.95 per minute. A
true and correct copy of the published price sheet showing the $14.67 rate is
attached as Exhibit D.
7. Mpower’s customer service records indicate that on September 11, 2006 at
10:40 a.m., Ms. Stepanova contacted Mpower and disputed the charges for the
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satellite calls stating that she did not make the calls. Ms. Stepanova also
requested a block on international dialing for her account. A credit request was
submitted by the Mpower customer service representative to the appropriate
staff.
8. Mpower’s customer service records indicate that on the same day, September
11, 2006, Mpower’s staff accessed the Customer’s account record at 2:12 p.m.,
and reported the following:
“RECEIVED CREDIT REQUEST FOR INTERNATIONAL FRAUD CALLS…. CREDIT REQUEST DENIED.... PER NEW POLICY NO CREDIT FOR FRAUD CALLS”
9. Mpower’s investigation on September 11, 2006, only involved checking the call
records. The call records indicated that the calls were directly dialed over the
fax line.
10. Mpower’s customer service records indicate that Ms. Stepanova called Mpower
on September 20, 2006, at 10:11 a.m., to ask how much credit she would
receive for the disputed charges. She was told that she would not be receiving
any credit because of Mpower’s new policy regarding fraudulent calls.
11. Mpower’s customer service records indicate that Ms. Stepanova called Mpower
again on September 20, 2006, at 10:24 a.m., and was told to fax her dispute to
Mpower for review. Ms. Stepanova faxed a written complaint to Mpower at
1:11 p.m. the same day. Exhibit E hereto is a true and correct copy of the
written complaint.
12. Mpower’s customer service records indicate that following receipt of the
complaint, Mpower confirmed that, under its policy, credit should not be given
to the Customer, and on September 29, 2006, Ms. Stepanova was advised by
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telephone that no adjustment would be made to the billed charges and that if she
failed to pay the charges her service could be disconnected.
13. On or about October 1, 2006, the Customer received a billing statement for
$2180.01 ($2336 after taxes, fees, and surcharges) including charges for an
additional eleven calls listed as “NBR Called” 881-9900060115 and “Place”
Iridium Sate from August 25 through August 31, 2006. Exhibit F hereto is a
true and correct copy of the bill.
14. These calls were completed by Mpower pursuant to its International 214 license
issued by the FCC under File No. ITC-214-19970731-00440. The charges for
the calls were incorrectly labeled by Mpower’s billing system as having been
placed to an Iridium Satellite phone instead of to a GlobalStar satellite phone,
which was the international destination indicated by the called numbers. Under
Mpower’s published price sheets for such calls, the billed rate of $14.67 per
minute was the appropriate rate to be charged for calls to GlobalStar satellite
phones, while the published rate for calls to Iridium Satellite phones would have
been $2.95 per minute. A true and correct copy of the published price sheet
showing the $14.67 rate is attached as Exhibit D.
15. On October 9, 2006, a second written complaint was faxed by Ms. Stepanova to
Mpower, which reiterated her dispute regarding the satellite phone charges on
the September 1, 2006 bill and also disputed the new international satellite
phone charges billed on October 1, 2006. Exhibit G hereto is a true and correct
copy of the second written complaint.
16. Mpower’s customer service records indicate that on October 10, 2006,
following receipt of the complaint, Mpower’s staff began a review of the
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Customer’s account at 11:25 a.m., and that at 11:42 a.m., Ms. Stepanova called
Mpower to inquire about the disputed charges and asked to be connected to a
supervisor. Ms. Stepanova was advised by the customer service representative
that time was needed to review the account and was placed on hold, but the
connection was inexplicably interrupted before Mpower could respond to her
inquiry.
17. On October 17, 2006, the Customer’s attorney, Lawrence T. Dougherty, spoke
with Elaine Calloway of the fraud analysis department at Mpower. After
speaking with Ms. Calloway, Mr. Dougherty sent a letter the same day to
Mpower summarizing the dispute and insisting, on behalf of the Customer, that
neither Ms. Stepanova nor anyone else with access to the Customer’s service
had made the calls for which the disputed charges were assessed. In addition,
Mr. Dougherty included a check in payment of undisputed charges. Exhibit H
hereto is a true and correct copy of the letter.
18. On October 19, 2006, an Mpower collections representative called Ms.
Stepanova regarding both the current balance and the past-due balance owed for
the Customer’s service and Ms. Stepanova disputed the charges.
19. On or about October 20, 2006, Mpower’s fraud department began a review of
the alleged fraud. The fraud department’s review indicated that if the calls were
not completed by persons located at the Customer’s premises, then it was likely
that the calls were made through a fraudulent scheme. In the following months,
the fraud department noted that six other Mpower customers had made similar
complaints to Mpower regarding allegedly unauthorized charges for calls
completed to GlobalStar satellite telephone numbers. In addition, during
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conference calls with other carrier representatives who participated with
Mpower in an informal industry security task force, Mpower learned that
customers of other carriers had been similarly affected by an alleged fraudulent
scheme to complete calls to GlobalStar numbers. No minutes of the discussions
with the security task force were kept and Mpower has no documents regarding
the discussions that took place. Mpower has no information by which it could
identify or quantify the other carriers or their customers who may also have
been victims of such activity.
20. Mpower subsequently contacted GlobalStar, but GlobalStar asserted that it did
not have call records matching those billed by Mpower to the Customer.
Mpower made Global Star, which was not a member of the security task force,
aware of the apparently fraudulent scheme identified by the task force, but was
unable to obtain further information from GlobalStar. Mpower did not engage
in call tracking or monitoring attempts after the discovery of the potential fraud
other than recording customer complaints. However, following Mpower’s
contact with GlobalStar, Mpower has not received contact from any customers
complaining of further allegedly fraudulent calls to the GlobalStar numbers.
21. The Customer has not identified the root cause of the allegedly fraudulent calls;
however, Ms. Stepanova has asserted that none of the Customer’s authorized
employees made the disputed satellite calls and that several of the calls were
made outside of normal business hours and on days when the Customer’s shop
was closed. Further, none of the phone numbers listed for the disputed charges
on the September 1 and October 1, 2006 bills had ever previously been called
by the Customer or Edelweiss Flowers, and Ms. Stepanova asserts that neither
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she nor other persons having authorized access to the Customer’s service during
the period in question had knowledge of these phone numbers prior to their
appearance on the Customer’s phone bill.
22. Based on its investigation, Mpower believes that if the calls billed to the
Customer were not made by persons located at the Customer’s premises, it is
most likely that they were completed through “modem hacking” (i.e.,
manipulating a telephone customer’s modem connection to complete calls).
The exact nature of any modem hacking that may have occurred in the
Customer’s case, as well as in the six other affected customers’ cases, is
unknown. One reported method involves the use of a high speed internet
connection by an outside third party to access a computer and dial out calls
through a POTS line that is connected to the computer, through a fax modem or
dial-up Internet modem. Based on the equipment in use at the Customer’s
premises at the time the satellite calls for which Mpower billed the disputed
charges, it is likely that this would have been the method used to make any
fraudulent calls. It is also possible that fraudulent calls could have been
completed through other methods, such as through unauthorized hardwire
connections to the Customer’s inside wiring if the network access point was not
adequately secured by the Customer. A recent inspection of the Customer’s
premises indicates that the network access point, while not inside the
Customer’s rented space, is within a locked room in the building in which the
Customer’s premises is located.
23. On October 30, 2006, during the course of Mpower’s ongoing investigation
relating to potential fraud involving calls to GlobalStar numbers, Mpower called
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Ms. Stepanova and confirmed that, in accordance with its fraud policy, it would
not issue a credit for the satellite calls billed on September 1, 2006 in the
amount of $1043.13.
24. After the Customer failed to pay the amounts billed for the disputed charges, the
Customer’s services were all suspended for nonpayment on November 28,
2006.
25. On November 30, 2006, a request was made on behalf of the Customer to
terminate the Agreement because the Customer did not want to continue paying
for service that had been suspended for nonpayment of disputed charges it
believed were unauthorized.
26. On December 1, 2006, Ms. Stepanova contacted Mpower indicating that she
had filed a police report regarding the unauthorized charges and requested that
service be reconnected until the matter was cleared up. Ms. Stepanova was
advised that Mpower would not do so. A true and correct copy of the police
report is attached hereto as Exhibit I.
27. On December 15, 2006, Ms. Stepanova contacted Mpower again to dispute the
charges.
28. On December 20, 2006, Mpower billed the Customer for $1349.58 in early
termination fees as a result of cancellation of the Agreement. A true and correct
copy of the bill is attached hereto as Exhibit J.
29. On January 30, 2007, Ms. Stepanova filed an informal complaint with the
Commission’s Consumer Affairs Branch (“CAB”).
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30. On February 27, 2007, the Law Office of Scott & Associates contacted the
Customer by letter demanding payment in the amount of $5132.88. A true and
correct copy of the letter is attached hereto as Exhibit K.
31. On March 1, 2007, CAB acknowledged receiving Ms. Stepanova’s informal
complaint. A true and correct copy of the acknowledgment is attached hereto as
Exhibit L.
32. In a letter dated March 6, 2007, Mpower responded to CAB regarding Ms.
Stepanova’s informal complaint. A true and correct copy of the response is
attached hereto as Exhibit M.
33. In a second letter to CAB dated March 19, 2007, Mpower made changes to the
first letter to confirm the total amount in dispute but erroneously stated the
disputed satellite charges as being $1,043.13 instead of $3,223.14, which
resulted in the amount of unpaid monthly recurring charges and local usage
being reported as $2740.17, instead of $261.17 Mpower also corrected the
contract termination date, which was incorrectly stated in the first letter as being
June 23, 2008 instead of June 23, 2007. A true and correct copy of the second
letter is attached hereto as Exhibit N.
34. Mpower did not provide CAB with information it had learned about the alleged
scheme involving the making of fraudulent calls to GlobalStar phone numbers;
nor did it communicate such information to the Customer or to any of the other
six customer who Mpower believed may have been victims of such scheme.
35. When a customer, such as Ms. Stepanova, contacts Mpower regarding alleged
fraud, the customer is provided Mpower’s then-current “Fraud Guideline,”
which, in part, instructs the customer to work with the customer’s vendors to
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identify the root causes of the alleged fraud. The Customer was provided a
copy of Mpower’s Fraud Guideline on October 30, 2006 and Mpower requested
that the Customer attempt to identify the root cause of the suspected fraud. A
copy of the Fraud Guideline provided to Ms. Stepanova is not available; but it
did not address “modem hacking.” A copy of Mpower’s current Fraud
Guideline is attached hereto as Exhibit O. Versions of the Fraud Guideline have
been published on Mpower’s website as early as May 2007.
36. Ms. Stepanova asserts that she had never received or seen any version of
Mpower’s Fraud Guideline or any information regarding modem hacking until
after the disputed charges were billed.
37. Ms. Stepanova and other authorized representatives for the Customer contacted
Mpower multiple times in October, November, and December 2006
communicating Ms. Stepanova’s position that the subject calls were
unauthorized and that the charges should be removed from the Customer’s
account.
38. The other six customers who Mpower believes may have been victims of the
fraudulent calling scheme that may have affected the Customer were initially
pursued for payment. The total dollar amount of related usage charges,
including those billed to the Customer, was $5,331.93. One of the other six
customers who complained of the charges was given a credit at the discretion of
Mpower in order to settle the matter after the Customer began taking action that
Mpower believed would unduly disrupt its relationships with other existing and
future customers.
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39. Mpower’s belief, as to these other six customers, is that it the calls were not
made by someone who was physically located at the customer’s premises, then
such calls were most likely the result of modem hacking. Mpower’s belief as to
these six customer is founded on essentially the same information as that upon
which its belief as to the Customer is based.
40. The other six customers did not receive a copy of the Fraud Guideline until after
they complained to Mpower about the allegedly fraudulent calls.
41. Mpower does not claim to have knowledge of what the affected customers,
including the Customer, did or did not do to protect against modem hacking or
other unauthorized access to their inside wiring or other customer premises
equipment. However, Mpower’s position is that if the disputed calls were made
through modem hacking or other unauthorized access to their inside wiring or
other customer premises equipment, then the customers, by definition, did not
take sufficient steps to prevent or “adequately secure” the customers’ equipment
from being hacked.
42. UCAN made the following data request and received the following response
regarding information from Mpower to customers regarding protecting against
hacking.
UCAN data request - “Please explain what steps you recommend that
your small business customers without PBXs or computerized phone
systems of any type take to protect against potential hacking of their phone
service. In providing an answer, please provide any pamphlets or written
information you provide to customers to inform them about steps they can
take to protect against hacking. Please also provide any internal
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memorandum, reports or documents that address proactive steps that can
be taken by small business customers without PBX to protect against
hacking.
Mpower’s response - It is Mpower’s position that “while carriers such as
Mpower try to alert their customers to possible sources of fraud, they are
not in a position to make specific recommendations.”
43. UCAN is the sole complainant in C.08-08-008.
Respectfully submitted this 15th day of January, 2009, at San Francisco,
California.
UTILITY CONSUMERS’ ACTION NETWORK Art Neill 3100 5th Avenue, Suite B San Diego, CA 92103 Telephone: (619) 696-6966 Facsimile: (619) 696-7477 E-mail: [email protected] By /s/ Art Neill Art Neill Attorneys and Representatives for Complainant
GOODIN, MACBRIDE, SQUERI, DAY & LAMPREY, LLP John L. Clark 505 Sansome Street, Suite 900 San Francisco, CA 94111 Telephone: (415) 765-8443 Facsimile: (415) 398-4321 E-mail: [email protected] By /s/ John L. Clark John L. Clark Attorneys for Defendant
2989/005/X106123.v2
CERTIFICATE OF SERVICE
I, Lisa Vieland, certify that I have on this 15th day of January 2009
caused a copy of the foregoing
JOINT STIPULATION OF FACTS IN C.08-08-008
to be served on all known parties to C.08-08-008 listed on the most recently
updated service list available on the California Public Utilities Commission
website, via email to those listed with email and via U.S. mail to those without
email service. I also caused courtesy copies to be hand-delivered as follows:
ALJ A. Kirk McKenzie California Public Utilities Commission 505 Van Ness Avenue, Room 5115 San Francisco, CA 94102
I declare under penalty of perjury that the foregoing is true and
correct. Executed this 15th day of January 2009 at San Francisco, California.
/s/ Lisa Vieland Lisa Vieland
2989/005/X106183.v1
Service List C. 08-08-008 Last Updated 12/4/08
ART NEILL [email protected] JOHN L. CLARK [email protected] A Kirk McKenzie [email protected]
PUC/X106185.v1