For Immediate Release: April 17, 2001

FOR FURTHER INFORMATION CONTACT:
Genene W. Morris, Consumer Affairs, 973-504-6327
Jose Gomez-Rivera, Board of Public Utilities, 973-648-6135

     NEWARK - Qwest Communications International, a Denver, Colorado-based telecommunications company and one of the nation's leading providers of business and residential telecommunications services, has agreed to pay the New Jersey Division of Consumer Affairs ("Consumer Affairs") and the New Jersey Board of Public Utilities ("BPU") $250,000 each and to implement anti-slamming policies to settle consumer complaints that it unlawfully switched New Jersey consumers' telephone service without first obtaining proper authorization, Attorney General John J. Farmer, Jr., Consumer Affairs Director Mark S. Herr and BPU Interim President Carol J. Murphy said today.

The agreement, which represents the largest settlement in State history of a telecommunications slamming case, was finalized Wednesday and stems from an investigation by Consumer Affairs and the BPU into allegations that Qwest, through sales representatives, engaged in "slamming," the unlawful act of switching consumers' local and/or long distance telephone service without their consent. In the settlement, Qwest did not admit any wrongdoing.

This is the 10th telecommunications slamming case that the State, through Consumer Affairs and the BPU has entered into since filing its first slamming case in May 1996 against National Accounts. Payments by these companies have ranged from $6,500 to $500,000 and total nearly $2 million.

Qwest, which merged with and took over the business operations of LCI International in June 1998, has used "in-house" marketers and independent contractors to attract new consumers through telemarketing, direct-mail, and face-to-face solicitations, in addition to traditional print and electronic advertising. Under State and Federal law, before submitting a change order and switching a consumer's phone service, telecommunications companies are required by law to first obtain that person's authorization either through a written "letter of agency" ("LOA"); an electronic authorization system which consumers call into, such as a toll-free hotline; or an independent third-party verification service which would contact the consumer to confirm the switch.

More than 150 consumers have complained to Consumer Affairs and the BPU since 1997 that Qwest either:

• submitted change orders based on forged LOAs, and in some cases when there was no LOA;
• billed consumers for monthly services charges even in cases when the consumer refused its services, place a freeze on their telephone lines to prevent unauthorized switches and continued billing even after the consumer canceled Qwest's services;
• failed to provide consumers with documentation supporting the change order submitted on Qwest's behalf when the consumers requested one;
• failed to adequately staff their customer service centers and/or train their customer service representatives to provide consumers with prompt, accurate and courteous customer service; and
• misrepresented or failed to adequately explain the rates at which domestic and/or international telephone calls would be billed.
• "Slamming is not only unfair to consumers, it is also unlawful," Farmer said. "This agreement demonstrates our resolve to continue to take the appropriate steps to ensure that consumers are protected."
• "It is our responsibility to investigate companies that don't play by the rules and take advantage of consumers," Herr said. "If you want to slam in New Jersey, you're not only barking up the wrong tree, but you've got the wrong number."
• "We will continue to take quick and decisive action against any company that engages in the practice of slamming," said BPU Interim President Carol J. Murphy. "The resolution of this matter will serve as an example and warning to those who seek to take advantage of consumers."

As part of the agreement, Qwest, for a two-year period, will, among other things:

• require every sales representative to review and sign an anti-slamming advisory, at least once every six months, acknowledging their understanding of its requirements and verifying their intent to comply;
• continue to require that all distributors and representatives transmit to Qwest the LOA upon which a change order obtained by face-face solicitation is based;
• continue to scan such LOAs into its database and review them for confirm validity to deter abuses, forgeries and falsifications;
• send a welcome mailing to each consumer for whom Qwest has received a service change order informing him or her that Qwest has received a service change order and is processing that order; and
• implement procedures that will ensure that all consumers who have previously indicated to Qwest that they do not want its services or who have alleged that their services were changed to Qwest without proper authorization, will not be returned to Qwest's services without clearly valid authorization.

Qwest recently settled similar allegations with the Federal Communications Commission ("FCC") and has commenced implementing many of the corrective measures contained in the State's consent order. Qwest will also be working with Consumer Affairs and the BPU to resolve those consumer complaints already on file.

Since 1996, Consumer Affairs and the BPU have either filed suit or entered into agreements involving slamming allegations with: National Accounts, Inc., of Parsippany; Heartline Communications, Inc., of Houston, Texas; Winstar Gateway Network, Inc., of Dallas, Texas; Homeowners Long Distance, Inc., of San Antonio, Texas; Equalnet Corporation of Houston, Texas; Furst Group, Inc., of Burlington County; Minimum Rate Pricing of Cedar Grove; Business Discount Plan of Long Beach, Calif.; and WorldCom, Inc., of Clinton, Miss.

Deputy Attorneys General Christopher J. Dalton and Todd Steadman of the Division of Law handled this matter for the State.

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