Qwest slams Peter Pan

A case of mistaken identity exposes how a long-distance telephone company is targeting Asian immigrants.


Deborah Scoblionkov
October 16, 2000 11:32PM (UTC)

My last name can be something of a challenge to pronounce (Sko-blee-onk-ov) and a brain twister to spell. So, in consideration of people who may want to contact me, I've listed my phone number in the telephone directory under my name, as well as the more whimsical, unforgettable and mnemonic alias: "Peter Pan."

Over the years, I've gotten my share of prank phone calls -- adolescents identifying themselves as "Captain Hook," asking for "Tinker Bell," that sort of thing. I'll respond as "Wendy," and we both usually crack up in laughter before hanging up.

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But in recent years, the benefits of having a phone book alter ego have been outweighed by the growing annoyance of telemarketers targeting the Asian immigrant community. The phone will ring during dinner, and when I answer I'm greeted with a long marketing pitch in Chinese -- the only words I recognize are "Mr. Pan." Worse, as the callers rarely speak English, they can't even get the joke.

Then, on a Friday evening in late August, I received a call (in English) from my long-distance provider, MCI WorldCom. Dismissing it as yet another telemarketing call offering me "additional services," I instructed the woman not to call again. But just as I was about to hang up, she explained that she was calling to inform me that I was no longer a customer of MCI.

What? For not taking her sales call?

No, according to her records, I had changed my long-distance service provider two days before and she was calling to verify it.

Her words sunk in: I'd been slammed.

Grrrrr.

Slamming is the sleazy byproduct of intense competition unleashed by deregulation of the telephone industry; it's an illegal practice in which unscrupulous and unethical long-distance telephone carriers switch someone's preferred provider without their knowledge or consent.

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Unfortunately, she could not provide me with the name of the company that slammed me. For that I'd have to wait until the weekend was over and request the information from my local phone company.

When I called Verizon a few days later to learn the identity of the new long distance provider that I had supposedly authorized to provide my service, it turned out to be Qwest -- the upstart telecommunications company based in Denver, Colo., that recently merged with US West. Sitting on a newly laid 18,500-mile, high-speed fiber optic network, Qwest has -- in a remarkably short time period -- grown to be the fourth-largest long-distance carrier in the nation, and that's merely a quarter of its business as a broadband, Internet-based telecom.

So I called Qwest. The company representative I spoke to confidently assured me that the change had been properly authorized. In fact, he could prove it to me by accessing a tape recording of the actual conversation.

Then he let out a chuckle. "What's your name?"

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I told him.

"Well then, who's Peter Pan?"

The tape recording we listened to revealed a man with a distinctly urban, African-American accent claiming to be "Peter Pan," who agreed to have his (my!) telephone service changed to Qwest. "Yeah, yeah," he said hurriedly when asked if he was responsible for authorizing the change.

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Who was this mystery Peter Pan? Had Qwest purposefully faked the authorization? Or was it someone's ideas of a prank? I still don't know for sure -- but I did learn later that Qwest has been repeatedly fined for questionably authorized slamming, even as it claims, at an executive level, to have "zero tolerance" for such abuses.

Like most of the new fiber optic telecom giants, Qwest projects an image of cutting-edge, high-tech glamour. Qwest is all about the future -- a future in which everyone will have more bandwidth than they know what to do with, a future in which Internet connectivity will be as natural as breathing. And like all the telecoms, Qwest prides itself on being responsive to "customer" needs. So why did it need to "slam" me?

Slamming first occurred shortly after 1985, when equal access to the newly deregulated long-distance telephone industry was first granted. But it soared to epidemic rates after the passage of the Telecommunications Act of 1996, which was in part designed to deter such practices. In June 1998, the Federal Communications Commission testified before Congress that slamming was the No. 1 complaint it heard from consumers; the commission practically begged the government for stronger regulatory powers to combat the problem. The FCC was overwhelmed: Complaints about slamming had jumped 175 percent, from 16,000 in 1996 to 44,000 in 1997.

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"Because most slammed consumers grin and bear it, we don't know how many of the 50 million carrier selection changes each year result from slamming," testified FCC commissioner Susan Ness in 1997. "If just 1 percent were slamming changes -- a very conservative estimate -- that would total over 500,000 slamming incidents each year."

In 1997, Connecticut Attorney General Richard Blumenthal estimated that slamming cost consumers more than $100 million annually. "These unscrupulous companies are nothing more than electronic pickpockets who not only scam consumers but siphon business from legitimate long-distance carriers," he said.

Members of the National Telephone Cooperative Association, a nonprofit representing more than 500 small, locally owned telecommunications companies in rural areas, have consistently found that when they called to verify customers' changes nearly 50 percent of all carrier change orders were fraudulent.

Anti-slamming legislation has been introduced in Congress but consistently gets put on hold while the telecommunications industry promises to regulate itself. Why the lack of action? Probably for the same reason that motivates slammers: greed. According to Common Cause, in the last election cycle (Jan. 1, 1999, to June 30, 2000) the telecommunications industry was the second largest contributor of soft money donations (behind the securities and investment industries), giving away a total of $17.7 million.

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The FCC finally got tough last year, establishing new rules and taking action against slammers. In October 1999, it proposed slapping Qwest with a $2.08 million fine for slamming abuses. According to an FCC report, between Sept. 1, 1998, and Aug. 31, 1999, "the Commission's Common Carrier Bureau processed 637 written consumer complaints alleging slamming by Qwest, and 551 written complaints alleging slamming by LCI [which had recently been acquired by Qwest]. During the same period, the Commission's National Call Center received 1,142 consumer calls regarding unauthorized changes by Qwest and 218 regarding such changes by LCI."

Among the complaints cited was a Riverside, Calif., woman whose husband, Qwest claimed, had authorized the switch. The only problem was her husband had been dead for eight years. Another individual was shocked to learn that Qwest had a "signed" authorization form from his deceased dog, Boris. The man had listed his phone number under his dog's name for privacy reasons.

In 22 cases, the FCC claimed forgeries or "otherwise falsified letters of authorization" were involved. Among the names of the complainants were a disproportionate number of Asian names, such as Wu, Tso, Yau, Tien, Yun, Lan and Shing.

In November 1999 Qwest appealed the fine, announcing that it was cracking down on slamming practices.

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"We have always had a zero-tolerance for slamming," said Joseph P. Nacchio, Qwest's chairman and CEO, in a press release that unveiled a "hard-line," long-term program aimed at detecting and eliminating the practice by company agents, distributors and other third-party representatives.

Meanwhile states began enacting their own anti-slamming laws. At least 10 states independently filed charges against Qwest. Many states negotiated settlements in which the company doesn't acknowledge wrongdoing. Oklahoma and Michigan settled for mere slaps on the wrist, $30,000 and $40,000 respectively; Arizona settled for $175,000; Minnesota extracted a $500,000 civil penalty from Qwest for a slew of deceptive marketing abuses. All of these fines amount to a pittance for a corporation that expects to achieve $18.5 billion in revenue and $7.4 billion in earnings for 2000.

But the allegations of racial profiling against Asians and Latinos by Qwest are the most disturbing. Minority immigrants are particularly susceptible to consumer fraud and reluctant to seek redress.

Michigan's Public Service Commission filed complaints against Qwest in 1999 on behalf of seven individuals with the last names of Le, Ha, Nguyen, Pung, Martinez and Sanchez. But most of those complaints were later dropped, according to a PSC press release, "at their request, due to settlements with Qwest for undisclosed amounts of money."

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In November 1999, Connecticut specifically charged Qwest with targeting Latino- and Asian-surnamed consumers for unauthorized switching of their long-distance carriers and billing for unauthorized services.

"Repeatedly and recklessly, Qwest has unlawfully targeted and slammed Latino and Asian consumers. This wrongdoing is consumer abuse at its worst," announced Connecticut Attorney General Richard Blumenthal when he brought charges against the company. "We will take every possible step to ensure that Qwest acts responsibly and pays penalties for its past defiance of our laws."

The lawsuit seeks tens of thousands of dollars in restitution and hundreds of thousands of dollars in penalties.

In response, Qwest issued a press release denying the charges that "it targeted Asian and Latino customers," adding that "it does not believe that there are proceedings against the company in the states of Florida and Texas."

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On July 21, nine months after it had called for the $2 million fine against Qwest, the FCC announced that it had reached an agreement with Qwest: The company would pay the government a $1.5 million settlement.

In a press release dated July 21, Qwest described the resolution as a "voluntary payment." Through this settlement, the release continued, "the FCC has endorsed Qwest's anti-slamming initiatives ... Qwest's anti-slamming policy becomes a model for others in the industry to combat slamming ... Since the policy's enactment [in 1999], Qwest has terminated more than 25 sales agents and/or telemarketing agencies that filed false orders. In addition, slamming incidents have dropped to levels in line with industry average."

Earlier this month, I contacted Qwest as a reporter to ask about its slamming policies. In response, I was faxed a copy of the November 1999 press release that announced the "zero-tolerance" policy by Nacchio and its efforts to eliminate the practice of customer slamming by company agents.

When I recounted my own experience, Qwest spokesperson Matt Barkett said, "No system is foolproof; you're going to have instances where mistakes are made."

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As for targeting Asians and Latinos, Barkett explained that it is standard industry practice to market to immigrant populations.

"It makes sense from a business viewpoint to market to ethnic communities," he said. "And with our outreach programs to non-English-speaking people, we try and reduce confusion by backing up our efforts with people who speak their native tongue and produce promotional materials in these languages."

In the meantime, I still haven't heard back from the FCC regarding a complaint I filed about the slamming incident, and I'm also scratching my head trying to figure out the new charges on my monthly telephone bill. But I have decided that it's time for Peter Pan to grow up. I'm searching for a new nom de phone, something a little more intimidating than a boy who won't grow up -- like Darth Vader, or maybe better yet, Ralph Nader.


Deborah Scoblionkov

Deborah Scoblionkov is a Philadelphia writer.

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