Cagey Consumer[13k]

For Immediate Release December 19, 1998
For more information, contact Eli Mantel, +1 650-493-7228

Minimum Rate Pricing Order May Prove Ineffective

The FCC issued an order to enter into a consent decree with Minimum Rate Pricing (MRP), a long distance carrier that allegedly had been using deceptive tactics to solicit consumers to select MRP as their long distance company.

Although MRP was also accused of "slamming" customers (as have numerous long distance companies, including AT&T) the most novel aspect of MRP's practices was its statements to prospective customers that they could save money compared to AT&T, MCI, and Sprint, because they set their rates to provide a percentage discount from the "minimum" basic rate of these three long distance companies.

In fact, this claim appears to have been true, at least with regard to interstate calls, but is nevertheless deceptive because of the likely inference that customers will be actually receiving the "minimum" rate (rather than the minimum basic rate) of these companies.

Although the Consent Decree prohibits some other alleged practices of MRP, it appears to explicitly permit this practice. As an example, the following script might well be interpreted to be in accordance with the terms of the consent decree:

Each month, Minimum Rate Pricing compares the basic state-to-state rates of major long distance companies, such as AT&T, MCI, and Sprint, to find the lowest basic rates charged by them. We set our peak rates to be 25% off of this rate for peak period calls and 10% off for non-peak calls. May we offer these rates to you using our Minimum Rate Pricing service?
It looks pretty obvious to the Cagey Consumer that this kind of solicitation would continue to confuse consumers. Since the $1.2 million fine against Minimum Rate Pricing will apparently not put them out of business, consumers have a reasonable expectation that MRP will not be allowed to continue with any of its deceptive practices. The FCC needs to re-examine its actions to make sure this is the case.
The Cagey Consumer web site is hosted on GeoCities at www.geocities.com/WallStreet/5395. The editor and publisher of Cagey Consumer is Eli Mantel, a computer systems analyst in Palo Alto, California.
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