LV firm agrees to hefty fine

Kevin Rademacher

Tuesday, Nov. 4, 2003 | 11:23 a.m.

The Federal Communication Commission on Monday announced a $1.2 million fine against NOS Communications of Las Vegas and two affiliates for conducting a deceptive telemarketing campaign.

The fine comes less than a year after the FCC ordered NOS to pay $1 million for unrelated deceptive marketing practices.

Regulators said the most recent consent decree was agreed to by the company and the FCC's Enforcement Bureau. The decree was approved by an administrative law judge last week.

William Wright, general counsel for NOS Communications, said the consent decree must still be approved by a vote of the five FCC commissioners, and declined to comment on details of the case. He said the decree "speaks for itself."

David Solomon, Enforcement Bureau chief, said the company has "committed to alter its telemarketing practices in significant respects so that consumers are not misled."

He added, however, that the company will be under close scrutiny.

"The Enforcement Bureau will be carefully monitoring NOS's compliance with the consent decree and stands ready to take further aggressive enforcement steps should NOS fail to comply fully," Solomon said.

In April, the FCC ordered a hearing into the company's "Winback Campaign," which was aimed at luring back departed customers. At that time, the FCC indicated that it could revoked the company's interstate carrier license. Nevada regulators said the loss of the interstate license would have effectively shut the company down since less than 1 percent of its business is conducted in Nevada.

The campaign apparently began in December 2001, FCC documents said, and was centered around efforts to convince customers that their new carrier had not completed the switch. NOS representatives told customers that an interruption in service was possible if they did not agree to retain the company under a temporary agreement, FCC filings said.

NOS and its affiliates -- Affinity Network Inc. and NOSVA Ltd. -- provide long distance telephone service to primarily small- and medium-sized businesses.

The April hearing order included transcripts of conversations between businesses and NOS representatives in which the alleged dubious practices were used.

The recent fine is the latest in a series of episodes involving allegations of deceptive practices leveled against NOS. The previous $1 million fine was related to nearly 900 complaints the FCC said it received against NOS between 1997 and 2001 for alleged "bait-and-switch" marketing tactics.

In March 2002, Florida regulators fined the company $2.5 million based on charges that it misled customers. Wisconsin barred NOS from doing business in that state last year.

John McGlamery, deputy attorney general for the Nevada Bureau of Consumer Protection, said the state agency is still pursuing an injunction against NOS in the court system. A Carson City judge denied the injunction request in October 2002. McGlamery said the BCP is waiting to hear the results of an appeal to the Nevada Supreme Court.

If granted, it would allow for court-imposed civil and criminal penalties against the company for violating telecommunications statutes, McGlamery said.