Deceptive practices alleged at NOS Communications

Thursday, July 11, 2002 | 10:48 a.m.

The state of Nevada disclosed Wednesday it's poised to take action against NOS Communications Inc. of Las Vegas, which has already been penalized by the federal government and two other states for fraudulent billing practices.

State Consumer Advocate Timothy Hay, the chief deputy attorney general, revealed enforcement plans against NOS after NOS sued the state. He said NOS had filed a complaint for a declaratory judgment that "appears to be an attempt by NOS and its affiliate, Affinity Networks Inc., to thwart enforcement actions by the Bureau of Consumer Protection."

"NOS Communications refused to take steps requested by the Bureau of Consumer Protection to change its business practices to correct deceptive aspects to avoid possible legal action," a statement by the state said. "Instead, NOS filed a complaint for declaratory judgment in an effort to prevent the Bureau of Consumer Protection from filing its own action."

Hay said his office has received numerous complaints from consumers regarding NOS and its affiliates' business practices. NOS charges for long distance telephone services by using a complex "call-unit" method that is used by no other long distance provider, Hay said.

NOS customers, many of which are small businesses, have complained to regulators that they were misled into thinking "call units" equaled minutes as is the standard billing practice in the long distance industry. The customers discovered the call-unit billing method resulted in higher charges than if they had been billed by the minute.

Similar allegations leveled against NOS and its affiliates have led to other enforcement actions against NOS, including:

--A $2.5 million fine imposed by the state of Florida March 6.

--A $1 million fine levied by the Federal Communications Commission in 2001. The FCC said it had received 900 complaints since 1997 against NOS and its subsidiary Affinity Networks.

--Hay said the Wisconsin Public Utilities Commission recently revoked NOS' certification to operate.

NOS attorney Danny Adams disputed Hay's allegations, saying its lawsuit -- filed early June in Carson City -- disputed attempts by the state Bureau of Consumer Protection to force NOS to abandon its call-unit method of billing.

"We are requesting a declaratory ruling from the court to find that the telemarketing practices of NOS are consistent with state law," Adams said. "We don't think we have any legal obligation to abandon our call-unit method of billing."

"The Wisconsin PUC decertification was based on a mistake that NOS made. Because NOS is doing business under many 'dbas' like Quantum Link, HorizonOne, we are required not only to file for certification with Wisconsin's Secretary of State office but also with its Public Utilities Commission," he said.

"That job was supposed to be done by a Florida contractor called Technology Management and it wasn't done," he said.

"But the bigger issue that Hay was referring to was Wisconsin's rule that requires certain long distance carriers to report the length of each call in minutes and seconds," Adams said. "Our contention is that the rule applies only to telephone utilities in Wisconsin only, and doesn't apply to those who resell the long distance services of others, for example, in NOS's resale of MCI WorldCom services."

But Hay vowed to vigorously pursue his case against NOS.

"Nevada is not a shelter for those engaged in deceptive business practices," he said.