Attorney Generals News Release

November 16, 1995

Federal judge sets hearing date on agreement to provide certain United Telephone customers with free calling cards

Jefferson City, Mo. — A federal magistrate judge in Jefferson City yesterday set a hearing date of Feb. 8 for giving final approval to an agreement between Missouri Attorney General Jay Nixon and United Telephone Co. If the agreement is approved, as many as 20,000 United Telephone customers in Missouri would receive prepaid long-distance calling cards worth about $670,000 total.

Magistrate Judge William A. Knox also approved the text of a notice that United Telephone will be required to publish in several specific Missouri daily newspapers during December and January to help inform consumers of the proposed agreement.

The agreement would resolve allegations by Nixon that United Telephone violated state and federal antitrust laws and state consumer laws in its marketing of RepairCare, an inside wire maintenance plan for residential customers. Inside wire is the telephone wire inside customers' homes that connects their telephone sets to the main telephone system.

United Telephone began marketing RepairCare to customers for an additional monthly charge in early 1987 after the Federal Communications Commission deregulated charges for inside wire maintenance. Previously these charges were included in the monthly charges for basic service.

At the time, United Telephone provided a negative option solicitation to its customers for RepairCare; that is, if customers did not inform United Telephone that they did not want RepairCare, it was added to their bills without their affirmative consent. Nixon said this was a violation of Missouri consumer law.

Nixon also said that from 1987 on, United Telephone misled its residential customers as to the cost and frequency of inside repair, and failed to inform customers that such repair was available from its competitors or that most customers could easily afford the repairs. The monthly charge for RepairCare in 1987 was $.95; currently it is $1.50.

“The original intent behind deregulating these charges was to open up competition and benefit the consumer,” Nixon said. “United Telephone took unfair advantage of its position as a basic service monopoly when it marketed RepairCare to its residential customers.”

Under the proposed settlement with the Attorney General's Office, United Telephone will send prepaid long-distance calling cards to customers whose RepairCare coverage resulted from the negative option solicitation in 1987 and who paid for RepairCare on any United Telephone bill between Nov. 1, 1992 and Oct. 31, 1995.

Each eligible customer will receive a long-distance card with a dollar value of at least $5 or the amount the customer paid for RepairCare during the period between Nov. 1, 1992, and Oct. 31, 1995, whichever is greater. The card will be good for long-distance calls anywhere in the United States for a two-year period after it is issued.

United Telephone also will not be permitted to charge these eligible customers for inside wire maintenance until the individual customers notify the company that they wish to keep RepairCare. The company also will notify all its residential customers, through a bill insert, that they have the option of dropping RepairCare if they currently are covered.

In addition to the calling cards, United Telephone will pay a total of $67,000 to the Missouri Antitrust Revolving Fund and the Missouri Merchandising Practices Revolving Fund. If the total restitution in calling cards to customers does not reach $670,000, United Telephone will pay the difference to the Antitrust Revolving Fund.

If the restitution amount exceeds $670,000, United Telephone will pay 10 percent of the difference to the Antitrust Revolving Fund.

Inquiries from consumers should be directed to consumer@ago.mo.gov or 1-800-392-8222 (from within Missouri) or 573-751-3321 (outside Missouri).

All media inquiries should be directed to Press Secretary John Fougere.

E-mail      Phone: 573-751-8844         Fax: 573-751-5818