Responding to thousands of consumer
complaints, two federal agencies are moving to assure that
advertising for long-distance phone service is truthful, easy to
understand and free from deception.
One company, MCI WorldCom, already has agreed to settle charges
over ads for its so-called dial-around services, which require
callers to dial a string of numbers before placing a call.
The company has reached a consent agreement with the Federal
Communications Commission to review its ads for dial-around service
and pay $100,000, sources familiar with the case said Tuesday.
Under the agreement, the company will review a year's worth of
past ads for dial-around service and submit a report to the FCC,
the sources said. Other components of the agreement deal with
disclosure of prices for national directory assistance, also a
dial-around service, and customer service to answer questions about
The agreement comes as regulators have fielded thousands of
complaints from consumers about misleading advertising in the
As a result, the FCC and Federal Trade Commission planned to
issue a joint policy statement today outlining principles that
long-distance companies should follow to avoid enforcement action
for deceptive advertising.
"It's too confusing to buy telephone services in America;
that's what the public is telling us," FCC Chairman William
Kennard said. "The good news is that we have more competition than
ever before. Now we have to make sure consumers get the information
they need to make an informed choice."
"As the phone business becomes more and more competitive, we
get more and more complaints from consumers," Kennard said.
The new policy will assure that callers including those
choosing to use dial-around services with "10-10" numbers
"will have the knowledge they need to select the carrier of their
choice and be fairly charged for the services they use," he said.
The new policy contains these elements:
All claims for long-distance service, including cost, must be
truthful, non-misleading and substantiated.
All costs that may be incurred by consumers should be
disclosed, including minimum charges per call, monthly fees, and
universal service charges.
The basis of comparative price claims should be disclosed and
only current information should be used in making such claims.
Information should be disclosed "in a clear and conspicuous
manner, and without distracting elements so that consumers can
The FCC said that it received nearly 3,000 complaints from
consumers about allegedly deceptive or misleading advertising by
marketers of dial-around service in the first six months of 1999
Officials said examples include claims of 10-cents-a-minute
service "all day and all night" when the rate is actually
applicable only for state-to-state calls after 7 p.m. on weekends.
In another example, a marketer conveyed the message that
long-distance calls cost a dime a minute and did not disclose the
fact that each call is subject to a 50-cent minimum charge.
In a third case, the FCC said, long-distance calls costing a
dime a minute are available only to customers who pay a $5.95
The FCC said that 20 percent of U.S. households have used
dial-around services in the last year and that it now represents
7.5 percent of the long-distance market, with revenues reaching $3
billion in 1999.
Associated Press Writer Kalpana Srinivasan contributed to this