Office of the Attorney General News Release Archive


Wednesday, June 27, 2001

CORNYN SUES TO HALT LONG DISTANCE COLLECT CALL SCAM DIRECTED AT HISPANIC CONSUMERS

Texas is first state to take enforcement action against international collect call scheme

AUSTIN - Texas Attorney General John Cornyn today sued Southwest Intelecom, Inc., an Austin-based telecommunications company accused of defrauding thousands of Hispanic consumers through an elaborate collect call scheme. The Attorney General also traveled to San Antonio, Dallas and Houston to announce the filing of the lawsuit and meet with affected consumers.

"Today we have taken a decisive step in curtailing a long-running scheme that has illegally taken untold amounts, primarily from Hispanic consumers," said Attorney General Cornyn. "In the weeks to come, as more consumers step forward, we will learn the true magnitude of this scam. We expect nothing short of full compensation for victims."

According to complaints, Hispanic-surnamed families received collect calls from persons claiming to be long-lost relatives in Mexico, usually facing an emergency. Various other methods were used to get consumers to accept charges. Once accepted, consumers were billed a minimum of $50 for calls that sometimes lasted only seconds. Many consumers were targeted repeatedly.

"Today's legal actions are part of an aggressive effort by my office to protect the Hispanic community and, in particular, Spanish-speakers," said the Attorney General. "Some of the consumers targeted under this scheme spoke limited English. But consumers' voices were heard loud and clear, and we are acting accordingly."

In a related legal action, Attorney General Cornyn also filed an assurance of voluntary compliance (AVC) with Zero Plus One Dialing, Inc. (ZPDI), the company that provided billing services for Southwest Intelecom. ZPDI is based in San Antonio and is a subsidiary of Billing Concepts Incorporated (BCI). Both Southwest Intelecom and ZPDI operate nationally, and Texas is the first state to file legal actions related to the companies' involvement in the collect call scheme.

Southwest Intelecom is the company that provided the long distance service. It contracted ZPDI as its billing agent. ZPDI would in turn bill amounts on behalf of Southwest Intelecom, and those invoices would appear on consumers' regular telephone statements.

"With the assurance of voluntary compliance, ZPDI is taking positive steps to make sure that client companies, like Southwest Intelecom, treat consumers fairly. In addition, ZPDI will be making refunds or issuing credits to all consumers who have complained about the collect call bills they received from ZPDI and Southwest Intelecom," Cornyn stated.

The Office of the Attorney General has received hundreds of complaints filed by consumers against ZPDI and Southwest Intelecom. The Texas Public Utility Commission and the Better Business Bureau assisted the investigation by providing a considerable number of additional complaints.

Although Southwest Intelecom received hundreds of complaints directly from consumers, it typically responded through misleading form letters. According to the lawsuit against Southwest Intelecom, the company routinely informed consumers who complained about fraudulent calls that it had "investigated" the matter and that it was "technically impossible for the call to be in error." Southwest Intelecom's "investigations" merely consisted of printing the record of the call from the company's in-house database. Such records had been entered by Southwest Intelecom's own employees in the first place.

Southwest Intelecom further denied its responsibility by telling consumers that it was simply a management company with no involvement in processing the calls from Mexico. However, evidence uncovered by the Attorney General revealed that Southwest Intelecom was in fact paying commissions of up to 72 percent to agents it had hired in Texas, California, Arkansas and Mexico to generate calls from Mexico to the United States.

As early as 1999, operators handling calls from Mexico on behalf of Southwest Intelecom told the company it was receiving a large number of consumer complaints.

In his lawsuit against Southwest Intelecom, filed under the Texas Deceptive Trade Practices Act, Attorney General Cornyn seeks a temporary injunction against the company prohibiting it from submitting long distance bills until it establishes a reliable system to verify that calls are legitimate and properly accepted.

The lawsuit also seeks restitution for consumers, fines against Southwest Intelecom of $2,000 for each violation of the Texas Deceptive Trade Practices Act, and attorneys' fees.

In the related assurance of voluntary compliance with ZPDI filed today in state district court in Travis County, the company has agreed to a 90-day window, starting June 27, 2001, during which it will provide reimbursements to all consumers who were wrongfully billed for collect calls from Mexico.

During his trip today, Attorney General Cornyn met with Mr. Roland Menchaca, a San Antonio resident whose teenage daughters were targeted several times through their private line. The Menchaca's were originally billed for a collect call to the daughters' line which could not have been accepted. According to the Menchaca's the daughters were away on vacation at the time the call was made. Another call to the daughters was made by a person falsely claiming to be an uncle in Mexico.

In Dallas, Attorney General Cornyn heard from Juan and Alicia Vega, who were charged for two bogus calls. In both cases the Vega's child, a four-year-old, answered the phone and someone claiming to be his uncle tried to keep him on the line. When the child's father became aware of the situation and took the phone from his son, the caller hung up. The first call, which lasted only a couple of minutes, was billed at $50. The second call cost the Vega's $74.55 for eleven minutes of talk time.

In Houston, Attorney General Cornyn met with Fernando Murguía. Mr. Murguía received a call from a woman claiming to be his sister, María Murguía, who was calling from Mexico. He accepted charges and immediately realized the caller was an impostor. He was charged $50 for a two-minute call.

Other consumers with similar problems who have been wrongfully billed by ZPDI and/or Southwest Intelecom should immediately contact the Office of the Attorney General at 1-800-252-8011 to file complaints requesting reimbursement. Complaints can also be filed online, in English and Spanish, though the Attorney General's homepage at www.oag.state.tx.us.

Consumers should also contact the Office of the Attorney General if they wish to file complaints of similar activity by companies other than ZPDI and Southwest Intelecom.

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