(Bloomberg) — CenturyLink Inc., already facing a $12 billion lawsuit alleging that consumers were saddled with costly unwanted services, now must deal with a complaint by Minnesota, the first state to sue the telecommunications company over its billing practices since the class action was filed.
The state attorney general’s suit, filed Wednesday, accuses CenturyLink of consumer fraud and deceptive trade practices. “CenturyLink has regularly misquoted the price of its internet and television services to Minnesota consumers,” it alleges. “In a response to a complaint from the Minnesota Attorney General’s Office on behalf of a consumer, a CenturyLink employee stated that, of the sales recordings she reviews, ‘maybe 1 out of 5 are quoted correctly or close enough.’ ”
“Shopping for internet and cable TV service isn’t easy if companies don’t give straight answers about the prices they will charge,” Attorney General Lori Swanson said in a statement.
The complaint comes as the Monroe, La., company is in the midst of a $34 billion merger with Level 3 Communications Inc. that will put CenturyLink up against powerhouses such as AT&T Inc. in bidding to provide communications services to businesses.
“We have been cooperating with the Minnesota Attorney General’s Office since its inquiry began and have provided all information requested,” Mark Molzen, a CenturyLink spokesman, said in an e-mail. “We are disappointed that the Attorney General has chosen a press conference to communicate her concerns instead of contacting CenturyLink directly. We take these allegations seriously and will review and respond in due course.”
Shares of CenturyLink closed down 3.2 percent, to $22.51, on the news.
The Minnesota attorney general’s office received hundreds of complaints about billing from CenturyLink customers, Swanson said in a phone interview.
“We’ve been investigating for over a year,” she said, first serving the company with a civil investigative demand. In one instance, her office asked CenturyLink for recordings of customer calls, and the company replied that they didn’t exist, she said. She said she got them only after her office subpoenaed a third-party vendor that had custody of the recordings. According to the complaint, CenturyLink called the attorney general’s request for full price information “unduly burdensome.”
“First and foremost, we want the company to stop doing what it’s doing to people,” Swanson said. “We would like to see injunctive relief so the company quotes accurate pricing. And, second, we want to see money back for people.”
CenturyLink’s Molzen said the company “produced a significant volume of documents and information, including audio tapes. We have kept an open line of communication with the [attorney general’s] Office throughout the investigation. At no time did the Attorney General’s Office suggest that CenturyLink was not providing information or responding adequately to the Office’s requests.”
The earlier suit, seeking class action status and damages as high as $12 billion, is making its way through the courts. It was brought by the Geragos & Geragos law firm, led by celebrity attorney Mark J. Geragos. Class actions are common after contentious allegations against large companies.
CenturyLink was accused of inappropriately charging customers by Heidi Heiser, a former employee who claims she was fired for whistleblowing and who sued the company in Arizona for wrongful termination in June. Her complaint alleged that CenturyLink “allowed persons who had a personal incentive to add services or lines to customer accounts to falsely indicate on the CenturyLink system the approval by a customer of new lines or services.”
Additional cases have been filed in California, Oregon, Idaho, Colorado, Nevada, and Washington.
“We are proud to have exposed this massive fraud on consumers, which has unjustly enriched CenturyLink to the tune of billions of dollars nationwide,” said Ben Meiselas, the attorney with Geragos & Geragos who represents plaintiffs in those cases and is seeking to have them treated as a class. “We applaud Attorney General Swanson and call on all Attorney Generals across the nation to protect its consumers against CenturyLink.”
Of the class action complaint, CenturyLink’s Molzen said last month, “The fact that a law firm is trying to leverage a wrongful termination suit into a putative class action lawsuit does not change our original position. He said Heiser failed to report her allegations to the company’s 24-hour Integrity Line, that they are “are completely inconsistent” with company policy and culture, and that “we take these allegations seriously and are diligently investigating this matter.”
Heiser didn’t report her concerns to the Federal Communications Commission or other authorities.
CenturyLink, which provides data services nationwide, including hosting, cloud, and information technology services, booked $816 million in net income on $17.5 billion in sales last year.