[November 17, 2004]

What Happens When Telecoms Hang Up?

BY JOHANNE TORRES

As many new small companies try to compete with the big guys in the telecommunications space, it might seem a little confusing to consumers when choosing a carrier. Most consumers look for cheaper calling plans, regardless of the size or experience of the handful of companies that serve their area.

With such heavy competition, even the smallest telecoms fail to make the profits necessary to stay afloat. Companies that don’t make it and file for bankruptcy often hang up on hundreds of customers, literally. This whole situation gets really ugly really fast when authorities end up being asked to intercede on behalf of those consumers that were left behind.

Such an unfortunate situation began to see resolution last week thanks to a petition brought to the attention of the Federal Trade Commission (FTC) by Senator Hillary Rodham Clinton about a month ago. New Jersey-based NorVergence Solutions (news - alert) —a telecom company that allegedly made false promises to customers through deceptive marketing, might have to face the judge at a Federal court thanks to the efforts of the Senator and the FTC Chairman Deborah Platt Majoras.

Last week, Majoras sent a letter to Senator Clinton informing her that she filed a suit in the Federal court against the telecom and will make sure customers won’t be liable for fees for services they never received.

In a letter posted by the Senator found on her Web site, Clinton states: "I am confident that the FTC's announcement will result in justice being served for the small businessmen and women who were deceived by NorVergence's unscrupulous business practices, and I will continue to follow the progress of this case as it makes its way through court. I am particularly pleased that the FTC has also taken action to ensure that those small business owners who are being unfairly charged for the service that NorVergence failed to provide will be protected."

The telecom captured customers by promising to cut their telecommunication expenses by as much as thirty percent. According to Cinton’s announcement, customers later complained that NorVergence never provided the service and often charged highly inflated prices for common equipment and service that was advertised as cutting-edge technology but available elsewhere at much lower costs.

NorVergence ended up declaring bankruptcy this summer, hanging up on over 11,000 customers nationwide. Customers were left without phone service around the U.S., including many in New York State, where Senator Clinton has her local office. The telecom provided customers with equipment offered by leasing and equipment rental agreements with third party companies, resulting in customers’ getting stuck with such contracts.

According to the FTC, NorVergence will be sued for allegedly committing "deceptive and unfair practices in its sale of telecommunications packages and transfer of equipment rental agreements, in violation of Section 5 of the FTC Act".

Nowadays, customers are bombarded with so many save-a-lot calling plan ads that it is natural for them to just see which company offers the lowest price, and sign up. With cellular plans, however, companies present customers with coverage maps, enabling them to view dead and covered spots around the areas they will be using the phone. Let us all consider the following four important key factors when selecting a calling plan: experience, reputation, customer service and low prices.

We as customers have the means to research and obtain feedback information on the Internet. This information can be found in forums, chat logs and blogs around the net for free. There will always be companies that serve the customer responsibly, but unfortunately every now and then we will see companies that are deceptive. Let’s make sure that next time we research well and consider all four key factors before choosing to invest in any type of calling service, be it fixed-line, cellular and/or VoIP. If you end up being a victim of a company’s marketing gimmicks, you too have the right to complain, even to the highest authority, so you get a fair and favorable resolution.