BY KEITH BENMAN, Times of Northwest Indiana
kbenman@nwitimes.com MERRILLVILLE | Three years ago, a Merrillville company selling cut-rate phone service agreed to pay $1.28 million to federal regulators following complaints it changed consumers' long-distance service without their permission.
The principals in that company, brothers Kurtis and Keanan Kintzel, promised the
Federal Communications Commission they would desist from the practice, commonly known as "slamming."
Six months later, the Maine Public Utilities Commission fined the Kintzels and their company, Business Options Inc., $750,000. It found the company had deceived customers into thinking they were being offered discounts by
Verizon or
AT&T.
Now, utility regulators and law enforcement officials in more than a dozen states are making many of the same charges, alleging a successor company called Buzz Telecom preys on the elderly and -- in one case -- the dead.
And officials in many of those states are asking whatever happened to the 2004 FCC consent decree in which the Kintzels agreed to desist from marketing long-distance services in a deceptive manner.
"We are curious," said Dennis Howard II, chief rate investigator for Kentucky Attorney General Greg Stumbo. "It's like, OK, you get caught, don't do it again. So they lay low for a while and then start right up again."
Too big, too fast?In two recent interviews at the Merrillville offices of Buzzazz, another company the Kintzels operate, Kurtis Kintzel explained all the trouble as a result of rapid growth and overzealous regulators.
In his office, a stereo played Steely Dan's "Reelin' in the Years" and other numbers. On top was a framed photo of the Indiana Buzz, a youth baseball team his company sponsors and he manages.
A solidly-built man with intense green eyes, Kintzel delivered a vigorous defense.
"We never slammed anyone," Kintzel said with a chop of his right hand seated in a big swivel chair behind his desk.
"We wanted to be a big company," he added. "That's a question: Can a small company become a large company with the way things are set up today?"
He explained that for years, his company had done its own telemarketing from an office at 8380 Louisiana St., employing as many as 100 people. Last year,
the company hired a telemarketing firm and offered a "super-low" discount rate of 2.9 cents per minute for state-to-state calls.
Some 20,000 people signed up. And that was their downfall, according to Kintzel.
"Anytime you add that many customers, some are going to complain," he said. "And if just 2 or 3 percent of customers complain, regulators get very interested."
Bugged by BuzzConsumers and state public service commissions tell a far different story about Buzz Telecom.
"It stinks," said Grace Earhard, of Dayton, Ohio. "I'm 80 years old and that girl that called talked 90 miles per minute and said we're AT&T."
When Earhard received her first bill from Buzz Telecom, she called Buzz and said that was the last bill she'd pay. She received three more bills for $19.95 each and called the Public Utilities Commission of Ohio each time.
Earhard's complaint is one of 274 received by the commission from Ohio consumers.
The staff of the Ohio commission has recommended that Buzz Telecom be fined $294,400 for slamming and cramming. It wants the company banned from doing business in the state. In addition, Ohio's consumers counsel wants the company fined an additional $1.79 million.
The Indiana Attorney General's Office has received about 40 consumer complaints on Buzz Telecom and is investigating, according to spokeswoman Staci Schneider. The
Indiana Office of Utility Consumer Counselor has received about 20 complaints and is reviewing them, according to spokesman Anthony Swinger.
Regulators in more than dozen states altogether continue to pursue the Kintzels and Buzz Telecom, and sift out the relationships between that company, Buzzazz and another Kintzel company called TotalBiz 247.
At the end of last year, Buzz Telecom got out of the long-distance service business when it sold certain assets to UMCC Holdings Inc., of Indianapolis, Kintzel said.
Wild West telecomStates have been much more aggressive than the FCC in putting slammers and crammers out of business, said David Menzer, utility campaign organizer for
Citizens Action Coalition, Indiana's largest grassroots consumer group.
"The FCC is basically laissez-faire," Menzer said. "They may make a few examples of companies from time to time, but they're not proactive."
According to the 2004 FCC consent decree, Business Options Inc. had gone years without making required payments to the FCC universal service fund. The company was ordered to pay $770,000 to the fund.
The FCC apparently missed that fact in 2001, when it investigated another complaint against the company, because no questions about the missing payments were raised at that time.
Show us the moneyKintzel says the FCC action against his company in 2004 was initiated by five complaints.
However, the FCC hearing record shows at least 16 customers had their long-distance service changed to Buzz without their permission.
Kintzel said in addition to the $770,000 in back payments, Buzz Telecom also paid the $510,000 "voluntary contribution" that was part of the FCC order.
The FCC also required that all consumer switches to Business Options' long-distance service be verified by an independent, third-party company, as required by law.
State utility regulators are again questioning the veracity of the Kintzels' third-party verifications, this time at Buzz Telecom.
And although state regulators are the first defense against slammers and crammers, some freely admit fines often go uncollected.
That was the case with the $750,000 fine levied by the Maine Public Utilities Commission in late 2004. A previous $4.5 million fine levied against a company called WebNet Communications there also went uncollected.
"It is a very complicated process to try and collect, especially from the principals of the company," said Derek Davidson, director of the commission's consumer assistance division. "We thought it would be throwing good money after bad."
Dead man calling Howard, of the Kentucky attorney general's office, said one case in particular crystalized the Buzz Telecom case for him. He asked Kurtis Kintzel whether or not he had third-party verification for one elderly gentleman in particular.
Kintzel said yes, he had the recording and could send it.
"I said that's probably not plausible, because that person has been dead for 15 years," Howard said. "He (Kintzel) said there must have been a mistake, and I agreed with him."