- The Washington Times - Thursday, June 14, 2001

Talk America Holdings Inc., a Reston, Va., marketer of phone service, including AOL Long Distance, is being investigated in two-thirds of the states in which it does business for its marketing and billing practices.
Regulators in 10 states have made inquiries or initiated legal proceedings in response to thousands of consumer complaints about the publicly traded company.
Consumers accuse the company of "slamming" switching phone service without consent and overcharging for service. In North Carolina, a telemarketer switched a customer's phone service provider to Talk America when a child approved the change, according to a filing with that state's public service commission.
In Florida, the most recent state to begin an investigation of Talk America, regulators have received 1,200 complaints about the company since July 1, 1999.
Talk America markets local and long-distance service in 15 states and has 1.4 million customers. Most of those are long-distance customers who signed up through a Talk America promotion marketing AOL Long Distance. In at least 10 of the 15 states where Talk America does business, regulators are formally investigating the company or have made informal inquiries about its business practices.
In addition, the Federal Communications Commission has inquired about Talk America's business practices and marketing activities, according to a document filed with the North Carolina Utilities Commission. A spokesman with the FCC declined to confirm or deny that the company is under investigation.
Talk America disputes many of the complaints against it, and a spokeswoman said the company does not agree that it slams consumers.
"We in no way condone slamming. If any of those [reports of slamming] occurred, we will work to resolve them. We are not claiming we don't have issues, but this is not a fly-by-night operation," Talk America spokeswoman Ruth Abeshaus said.
Despite the long list of complaints, just one state so far has fined Talk America, which lost $61.8 million last year on revenue of $544.5 million.
But state officials readily acknowledge their frustration with Talk America, which recently changed its name from Talk.com and started as Tel-Save.com.
"We've been receiving an onslaught of complaints about them," said Eddie Roberson, chief of the Tennessee Regulatory Authority's consumer services division.
No phone company in Tennessee has had more complaints filed against it in the past six months than Talk America, Mr. Roberson said.
In Tennessee, 300 consumers have lodged complaints about Talk America. Georgia regulators have received 554 complaints about the company in the past year. North Carolina officials have received about 260 complaints since last year about Talk America and Access One, a telecommunications company it bought last year. Officials in Mississippi have an estimated 200 complaints on file, and in Alabama, regulators have received 139 complaints.
Officials in Pennsylvania, who received 171 complaints about the company since last year, as well as West Virginia, California and Texas also are investigating Talk America or have made informal inquiries.
"You'll see a lot of complaints against companies that have no name recognition and are aggressively trying to build market share because it's an uphill battle to do that, but there are way too many complaints. These numbers are overwhelming for a company of this size," said Philip Nowicki, the Georgia Public Service Commission's director of consumer affairs.
Alabama regulators fined the company $42,000 on May 16 in response to 84 verified complaints of slamming. It is the second-largest fine the state has levied against a company for slamming, said Karen Gaston, spokeswoman for the Alabama Public Service Commission's advisory staff.
Alabama officials required Talk America to post a $50,000 bond to cover potential costs associated with future consumer complaints.
Mississippi regulators are in settlement talks with the company and could levy a fine as soon as next week.
"If things work out as expected, they will probably be hit with the largest fine we have ever levied," Mississippi Public Service Commissioner Michael Callahan said.
In North Carolina, a hearing is scheduled for July 12, when state officials will outline the charges against Talk America and request that the company be fined. Robert Gillam, a lawyer with the North Carolina Utilities Commission, declined to indicate the amount of the fine the commission's staff will propose.
The staff of the Florida Public Service Commission also plans to decide July 12 whether it will recommend that commissioners fine Talk America.
In addition to slamming charges, Talk America faces criticism for its marketing practices.
In one instance, a telemarketer switched a North Carolina customer's phone-service provider to Talk America when a 10-year-old child contacted by the telemarketer authorized the change. Talk America has done its own telemarketing for the past six months, but not in response to complaints about marketing practices, Mrs. Abeshaus said.
A more frequent problem reported to regulators revolves around the use of promotional checks. Talk America sent $25 and $50 checks to customers of other local and long-distance phone companies. If a check was cashed, Talk America switched the service. That's not illegal, but some regulators say the company didn't make it clear enough to people that their service would be switched if the checks were cashed.
And in North Carolina, customers who never cashed the checks had their phone service changed because incorrect numbers were listed on some checks that were cashed.
Steve Shook, telecommunications analyst with Charlotte, N.C., investment banker Wachovia Securities, said Talk America's service is beginning to improve, despite past problems.
"They are focusing on keeping customers happy," Mr. Shook said.
The company's stock closed yesterday at $1.25 a share on the Nasdaq Composite Index, down 7 cents from Monday's close and from its 12-month high of $7.59 a share last Sept. 1.

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