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Federal Communications Commission
Washington, DC 20554
In the Matter of
Net One International, Inc.
Apparent Liability for Forfeiture
File No.: EB-TCD-12-00000418
NAL/Acct. No.: 201432170010
Notice of apparent liability for forfeiture
Adopted: July 11, 2014 Released: July 15, 2014
By the Commission:
* We propose a penalty of $1,600,000 against Net One International, Inc. (Net One or Company), for apparently billing consumers for unauthorized charges and fees purportedly in connection with long distance telephone service -- a practice commonly known as "cramming." Consumers explained that Net One charged them for services and "late fees" after they had affirmatively cancelled their service and paid their final bills. Indeed, many consumers complained that the Company threatened them with collection actions if they did not pay charges they had not authorized. The Commission is committed to protecting consumers against cramming and will take aggressive action against carriers that perpetrate such unjust and unreasonable acts. We propose this penalty after evaluating over 100 consumer complaints against Net One as part of our ongoing effort to protect consumers from being charged by carriers for services they did not authorize.
* Net One is a toll reseller that offers interexchange and international service. The Company has offices at 6931 University Blvd., Winter Park, Florida 32792.
* The Bureau reviewed over 100 consumer complaints filed against Net One with the Federal Communications Commission (Commission), the Federal Trade Commission (FTC), and the Better Business Bureau (BBB). Complainants allege that while they were once customers of Net One, in many cases the Company continued to bill them long after they had paid their final bill and notified Net One's customer service department that they were cancelling their accounts.
* Due to the large number of consumer complaints filed against the Company and the alleged misconduct evidenced by those complaints, the Commission's Enforcement Bureau (Bureau) initiated an investigation of Net One's practices by issuing a letter of inquiry (LOI) to the Company. Net One failed to submit a timely response to the LOI, and the Bureau released a Notice of Apparent Liability for Forfeiture proposing a $25,000 forfeiture based on the Company's failure to respond to a Commission order. Subsequently, the Bureau released a Forfeiture Order affirming the $25,000 forfeiture. Following the 2011 Net One NAL, consumers continued to file complaints against Net One, alleging similar instances of unauthorized charges.
* Based on the evidence before us, we find that Net One apparently willfully and repeatedly violated Section 201(b) of the Communications Act of 1934, as amended (Act). Section 201(b) of the Act states, in pertinent part, that "[a]ll charges, practices, classifications, and regulations for and in connection with [interstate or foreign] communication service [by wire or radio], shall be just and reasonable, and any such charge, practice, classification, or regulation that is unjust or unreasonable is hereby declared to be unlawful." The Commission has found that the inclusion of unauthorized charges and fees on consumers' telephone bills -- or "cramming" -- is an "unjust and unreasonable" practice under Section 201(b). Cramming can occur when carriers place unauthorized charges on their own telephone bills.
* During the course of its investigation, the Bureau reviewed over 100 consumer complaints alleging, among other things, that Net One billed consumers for long distance service after they had cancelled their service with Net One and paid their final bill. Some consumers explain that after closing their accounts with Net One, the Company continued to charge them, and often assessed late fees which compounded month after month. Other consumers state that Net One refused to stop billing them unless they paid additional charges and fees which were not authorized in the first place. For example:
* Complainant Ahmed stopped using Net One when he became a CenturyLink subscriber in January 2013. Mr. Ahmed repeatedly called Net One customer service to cancel his account. Nevertheless, Net One continued to bill Mr. Ahmed monthly, claiming that they could not cancel his account because they could not access his "account information." Finally, Net One agreed to stop billing him if he would pay an additional $10.99. Mr. Ahmed explains that "the customer agent asked me to pay $10.99 and that would stop billing statements. I paid the amount at the time but the monthly billing never stopped . . . . [N]ow they want me to [pay] $25.00 including $10.00 of late fee charges otherwise they would send the bill to collection agency."
* Complainant Bhatti, now an AT&T customer, "tried to cancel the Net One service. Net One states that they cannot cancel his service." Mr. Bhatti, who no longer uses Net One, repeatedly asked Net One customer service to cancel his account, but they are "still sending [him] bills."
* Complainant Birouty tried numerous times to cancel his parents' account with Net One. He explains that initially, on September 16, 2013, "I told them to cancel my parents account. [I] talked to a gentleman who told me there is an outstanding balance of $15.02 that must be paid before closing the account . . . . I told him I will pay it, but to close the account. He said . . . as soon as they receive my payment they will close the account. I sent in the payment the same day." One month later they "received a bill from NetOne that showed my payment was received in full and they did not close my account, but rather they levied another $10 late fee." He called Net One customer service to ask why the account was not closed, and the customer service representative "said that my account cannot be closed because it has an outstanding balance that I have to pay." The Net One representative told him that she could not close his account because only Mohamed Abdel Ghani is authorized to close accounts. On October 24, 2013, Mr. Birouty spoke with Mr. Ghani, who "would not close that account [but] . . . said he would remove all charges and I would receive a $0 [invoice] now and for every month and would only ever get billed if we used the [service]." Despite the fact that Mr. Ghani assured Mr. Birouty that the balance was $0, and they would be charged only if they resumed using the service, Net One billed the Biroutys an additional $30.15.
* Complainant Chakkala had a similar experience with Net One. He explains, "I have attempted to cancel my account . . . on numerous occasions. Thus far, there has been no resolution on the matter . . . . A representative for [Net One,] Mr. Mohammed Abdelghany, provided me with a `cancellation fee' of $40.00 in order to terminate my account. I paid the stated cancellation fee only to continue receiving bills."
* Complainant Elgowainy explains that Net One called him and offered a calling package for international calls with a "14 day money back guarantee." Because the plan turned out to be more expensive than he anticipated, Mr. Elgowainy tried to cancel the Net One plan the following day and have his money refunded, but his request to cancel was refused because, according to Net One, it was "not a good reason to cancel."
* Complainant El-Nakhal tried to cancel Net One's service in September 2012. He called the Net One customer service representative several times, but the Company continued to bill him. Customer service finally agreed to cancel his account and he paid a final bill of $8.21. Then he "received a new bill." He explains that "Netone refuses to cancel the service unless I pay $10. They threatened me with collection." Mr. El-Nakhal, now an AT&T customer, has been "receiving an increasing monthly bill from NET one. We try to call every month. No answer and no return calls."
* Complainant Foster called Net One to cancel her account on February 12, 2013. She was told that she would not be charged as long as she did not use the service, and she paid her account in full. She explains, "I kept getting bills & did not use the company's services. Wrote 2 letters & sent certified telling them that I canceled in Feb. & that I owe nothing. I didn't get a response. Called on 12/7/13 [and, eventually, was told that] I was supposed to call every month to reverse the monthly charges. I stated why do I need to do that when I canceled in Feb. . . . He stated that I need to pay my account in full in order to cancel. I have already done that in Feb. & and that I have sent letters about this. He said he could do nothing for me. . . ." Since then, Net One continued to bill Ms. Foster for a total of $167.76. Subsequently, Ms. Foster explains, "a representative from Net One . . . left me a voicemail informing me that I do not have to pay. I STILL GOT ANOTHER INVOICE AGAIN. . . . NetOne did credit the account $167.76 BUT are still charging me $3.11 [per month] and will keep sending me invoices to pay. I WANT THEM TO STOP!"
* Complainant George, now a Comcast customer, explains "I called customer service [to inform Net One that I was cancelling its service] and they gave me an `access number' to call but that did not work. They assured me that if I didn't use their access number I would not be charged. So I have not made any calls but every month they keep piling on taxes and late fees." Notwithstanding numerous attempts to cancel the service, "NetOne keeps billing . . . even though there are ZERO calls . . . just taxes and `late fees.' I have called their customer service a number of times . . . ."
* Complainant Gopalan, a Net One international prepaid calling card customer, discovered that Net One had opened a separate long distance account for him without his permission. After Net One sent him several bills, Mr. Gopalan repeatedly called to cancel the new account. "The Customer Service person agreed to close the account and credit the balance . . . . [After calling again] the Customer Service person I spoke to . . . said the account was still open, and agreed to close it and credit the balance shown on the bill . . . . I received another bill from NetOne . . . . I again called . . . the same customer service person . . . said that he will close the account immediately and give credit . . . . I have now received another bill from NetOne."
* Complainant Mattam explains, "I have called on various occasions to cancel our services with NetOne . . . . After speaking to their [customer service] representative it would seem as if my service has been ended, however, I am still being billed by this company every single month. Not only are we still being charged for a service that we have cancelled, we are still being charged administrative fees including late fees and printing fees."
* Complainant Towfeles explains that after she closed her account and paid her final bill in January 2013, Net One reopened her account and "[t]hey kept charging me about $18 a month for the past 7 months, including taxes and late fees every month until the balance has reached $120.07 as of October 2013 . . . . They do admit . . . that their account shows that we paid the full balance in January 2013. Despite many calls [to customer service] and despite talking to multiple people, . . . they still insist that we owe this amount and keep threatening to send it to collection."
* Other complainants offer similar experiences in trying to cancel their Net One accounts and finding that Net One continued to charge them for service, late fees, and other charges.
* Based on the evidence from the investigation, we conclude that Net One did not have authorization to continue billing consumers after they cancelled their service. After a consumer cancels his or her account and has paid any outstanding charges due and owing, any further charges by a carrier are inherently unjust and unreasonable. Accordingly, we find that Net One's practices with respect to these consumers unjust and unreasonable and an apparent violation of Section 201(b) of the Act.
* Section 503(b)(1) of the Act states that any person who willfully or repeatedly fails to comply with any provision of the Act or any rule, regulation, or order issued by the Commission, shall be liable to the United States for a forfeiture penalty. Section 503(b)(2)(B) of the Act empowers the Commission to assess a forfeiture of up to $150,000 for any violation occurring before September 13, 2013, and $160,000 for any violations occurring on or after that date, for each willful or repeated violation of the Act or of any rule, regulation, or order issued by the Commission under the Act. In exercising our forfeiture authority, we are required to take into account "the nature, circumstances, extent, and gravity of the violation and, with respect to the violator, the degree of culpability, any history of prior offenses, ability to pay, and such other matters as justice may require." In addition, the Commission has established forfeiture guidelines, which set forth base penalties for certain violations and identify criteria that we consider in exercising our discretion in determining the penalties to apply in any given case. Under the guidelines, we may adjust a forfeiture upward for violations that are egregious, intentional, or repeated, or that cause substantial harm or generate substantial economic gain for the violator.
* The Commission's forfeiture guidelines provide no base forfeiture for cramming; however, the Commission has established a $40,000 base forfeiture for cramming violations. Applying the $40,000 base forfeiture to each of the 20 cramming violations would result in a forfeiture of $800,000.
* Given the facts presented here, we believe that an upward adjustment is warranted. As the Commission reiterated in the Central NAL, "we may propose more significant forfeitures in the future as high as necessary, within the range of our statutory authority, to ensure that such companies do not charge consumers for unauthorized services." Net One apparently engaged in cramming repeatedly, including placing unauthorized charges on consumers' telephone bills multiple times -- indeed, we have reviewed many consumer complaints alleging improper conduct on Net One's part. We also note that the Bureau began this cramming investigation in 2011 and previously issued the 2011 Net One NAL based on the Company's failure to respond to the Bureau's inquiries, yet Net One has nevertheless continued to engage in the same conduct: imposing unauthorized charges on consumers' bills and preventing consumers from closing their accounts. Under Section 503, we may take into account the egregious and repeated nature of Net One's actions and, consistent with our recent enforcement actions, upwardly adjust the proposed forfeiture for its apparent cramming violations. Given the egregious circumstances here and the extent of Net One's improper conduct and the longstanding nature of Net One's cramming practices, all in the face of the repeated warnings of the Commission that cramming would not be tolerated, we determine that an upward adjustment of $800,000 is appropriate here. Accordingly, the total forfeiture we propose for Net One's conduct is $1,600,000.
* Based on the facts and record before us, we have determined that Net One International, Inc. has apparently willfully and repeatedly violated Section 201(b) of the Communications Act of 1934, as amended.
* Accordingly, IT IS ORDERED, pursuant to Section 503(b) of the Communications Act of 1934, as amended, 47 U.S.C. § 503(b), and Section 1.80 of the Commission's rules, 47 C.F.R. § 1.80, that Net One International, Inc. is hereby NOTIFIED of this APPARENT LIABILITY FOR FORFEITURE in the amount of $1,600,000 for willful and repeated violations of Section 201(b) of the Communications Act of 1934, as amended, 47 U.S.C. § 201(b).
* IT IS FURTHER ORDERED THAT, pursuant to Section 1.80 of the Commission's rules, 47 C.F.R. § 1.80, within thirty (30) days of the release date of this Notice of Apparent Liability for Forfeiture, Net One International, Inc. SHALL PAY the full amount of the proposed forfeiture or SHALL FILE a written statement seeking reduction or cancellation of the proposed forfeiture.
* Payment of the forfeiture must be made by check or similar instrument, wire transfer, or credit card, and must include the NAL/Account number and FRN referenced above. Net One International, Inc. shall send electronic notification of payment to Johnny Drake at firstname.lastname@example.org on the date said payment is made. Regardless of the form of payment, a completed FCC Form 159 (Remittance Advice) must be submitted. When completing the FCC Form 159, enter the Account Number in block number 23A (call sign/other ID) and enter the letters "FORF" in block number 24A (payment type code). Below are additional instructions Net One International, Inc. should follow based on the form of payment it selects:
Payment by check or money order must be made payable to the order of the Federal Communications Commission. Such payments (along with the completed Form 159) must be mailed to Federal Communications Commission, P.O. Box 979088, St. Louis, MO 63197-9000, or sent via overnight mail to U.S. Bank - Government Lockbox #979088, SL-MO-C2-GL, 1005 Convention Plaza, St. Louis, MO 63101.
Payment by wire transfer must be made to ABA Number 021030004, receiving bank TREAS/NYC, and Account Number 27000001. To complete the wire transfer and ensure appropriate crediting of the wired funds, a completed Form 159 must be faxed to U.S. Bank at (314) 418-4232 on the same business day the wire transfer is initiated.
Payment by credit card must be made by providing the required credit card information on FCC Form 159 and signing and dating the Form 159 to authorize the credit card payment. The completed Form 159 must then be mailed to Federal Communications Commission, P.O. Box 979088, St. Louis, MO 63197-9000, or sent via overnight mail to U.S. Bank - Government Lockbox #979088, SL-MO-C2-GL, 1005 Convention Plaza, St. Louis, MO 63101.
* Any request for making full payment over time under an installment plan should be sent to: Chief Financial Officer -- Financial Operations, Federal Communications Commission, 445 12[th] Street, SW, Room 1-A625, Washington, DC 20554. If Net One International, Inc. has questions regarding payment procedures, it can contact the Financial Operations Group Help Desk by phone, 1-877-480-3201, or by e-mail, ARINQUIRIES@fcc.gov.
* The response, if any, must be mailed both to the Office of the Secretary, Federal Communications Commission, 445 12[th] Street, SW, Washington, DC 20554, ATTN: Enforcement Bureau, Telecommunications Consumers Division, and to Richard A. Hindman, Chief, Telecommunications Consumers Division, Enforcement Bureau, Federal Communications Commission, 445 12[th] Street, SW, Washington, DC 20554, and must include the NAL/Acct. No. referenced in the caption.
* The Commission will not consider reducing or canceling a forfeiture in response to a claim of inability to pay unless the petitioner submits: (1) federal tax returns for the most recent three-year period; (2) financial statements prepared according to generally accepted accounting practices; or (3) some other reliable and objective documentation that accurately reflects the petitioner's current financial status. Any claim of inability to pay must specifically identify the basis for the claim by reference to the financial documentation submitted.
* IT IS FURTHER ORDERED that a copy of this Notice of Apparent Liability for Forfeiture shall be sent by Certified Mail Return Receipt Requested and First Class Mail to Net One International, Inc.'s attorney, Thomas R. Gainor, Law Offices of Moffa, Gainor, and Sutton, P.A., One Financial Plaza, Suite 2202, 100 Southeast Third Avenue, Fort Lauderdale, FL 33394.
FEDERAL COMMUNICATIONS COMMISSION
Marlene H. Dortch
Apparent Violations of Section 201(b) of the Act