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Ralph Nader > In the Public Interest > Consumer Defense Fund Needed to Monitor Telephone Companies

Ma Bell and the now independent, local Bell companies owe you $182 million from certain overcharges exacted in the year 1978. “What’s taking so long, you say? Well, the Federal Communications Commission (FCC) did not order a refund to long distance telephone consumers until November 22, 1904 and then only after a consumer group, the Telecommunications Research & Action Center (TRAC), successfully sued the FCC in the U.S. Court of Appeals.
Because of the difficulty and cost in locating the actual overcharged consumers, TRAC is asking the FCC to allocate part of the funds to support permanent public representation of telephone consumers before the FCC and state utility commissions who are making decisions on massive rate increase demands by the companies

The FCC, stung by the court’s decision, issued the refund order but it adopted a refund mechanism which, TRAC’s Director, Sam Simon, says “assures that consumers will never realize the return of their funds. In our view, the FCC proposal,” adds Simon, “isn’t a refund at all. Rather it simply shifts the millions of consumer dollars from the pocket of one company into the pocket of another.”

The idea of a portion of the overcharge going to endow a consumer telephone trust fund whose annual interest income would go to support expert consumer advocacy before these regulatory agencies is catching the attention of some Congressmen. Both Rep Ed Harkey (D-MA) and Henry Waxman (D-CA) are considering legislation to create such a trust fund.

Telephone refunds usually break down to small amounts ranging from under $1.00 to $5.00 per customer. Since sending such small sums to difficult-to-locate consumers is very costly, the alternative of slightly lowering charges for a brief period of time for everyone is chosen. Then, there is a hassle over the accounting maneuvers Recently, consumer groups are urging the trust fund concept which institutionalizes consumer advocacy and would save buyers far more money than a trivial refund even assuming they receive such a refund in fact.

All over the nation, state and federal regulatory agencies make decisions without the benefit of skilled consumer arguments. The companies are pleading their case with hordes of paid specialists, but the consumer chair in the hearing room is often empty.
If just a tiny portion of the refunds required by utilities and oil companies in recent years were placed into a consumer protection trust fund, the balance of power would be tipping more favorably toward the people who pay all the bills — the consumers. Carter’s Department of Energy, for example, cited oil companies in the late Seventies for overcharging their customers over ten billion dollars. Many of these cases have been settled for a few cents on the dollar or scuttled by the Reagan government. The Reaganites refused a petition to consider allocating a portion of these funds to a permanent advocacy fund for energy consumers. Instead, what overcharges are collected are sent to state government assistance programs.

A more likely pioneer in the consumer trust fund area comes out of anti-trust litigation with Levi-Strauss Corporation. Accused of setting prices on jeans, Levi-Strauss settled with plaintiffs and agreed to support a court approval for placing some $13 million into such a trust fund The interest on this proposed endowment would support consumer’ rights against anti-competitive or’ monopolistic practices of companies. The California Supreme Court is expected to issue a final decision in this case shortly.

Next time you wonder why your telephone bill is climbing upward ceaselessly, think what a well-equipped consumer defense fund, composed of that AT&T overcharge in 1978, can do to save you dollars year after year. If you think well of this idea write your members of Congress and let them know Time is of the essence for deciding how to take this particular telephone gouge and turn it into consumer watchdogs over the telephone companies.