900-Number Abuses Ring Alarm Bells : Communications: Mounting horror stories of rip-offs could lead to a crackdown. The FCC has proposed regulations and two measures are pending in Congress.

WASHINGTON —  Any time, day or night, church secretary-turned-Playboy model Jessica Hahn is waiting by the phone for your call so she can “reveal the secrets I have held for so long and share my most personal thoughts with you.”

Professional wrestler Lex Luger, “The Total Package,” is just itching to pick up his phone and discuss why “The Russian Nightmare” Nikita Koloff hit him over the head with a championship belt.

And veteran television game show host Monty Hall has a deal for you--an invitation to play his once-popular but long-canceled show, “Let’s Make a Deal,” by using any touch-tone phone.

But don’t ring Jessica or Lex or Monty without taking heed. The telephone lines they peddle, ones with the 900 prefix and often steep per-minute or lump sum charges, will cost you.

These three 900-number phone lines are among the thousands operating nationwide--most legitimate, but many fraudulent--that constitute the mushrooming $1-billion-a-year “pay-per-call,” or audiotext, industry.

But mounting horror stories of rip-offs and deception could lead to a crackdown. The Federal Communications Commission has proposed new regulations, while tougher measures, one from Rep. Bart Gordon (D-Tenn.) and another from Sen. John McCain (R-Ariz.) are pending in Congress.

“It’s now a billion-dollar industry with virtually no consumer protection and, to a great extent, has become the home to many scam artists who are recycling all of the old types of scams with this new technology,” Gordon said. “And I’m particularly concerned that it’s playing on the most vulnerable in our society--those in need of credit or jobs, the lonely and children. I think there is great reason to be concerned.”

Pay-per-call lines began in 1974 with stand-up comedian Henny Youngman’s New York dial-a-joke offering. The 900 prefix came into being in 1980, when ABC television used the lines as informal polling devices during the Reagan-Carter presidential debates. The court-ordered breakup of American Telephone & Telegraph in 1984 paved the way for a 900-number explosion since the late 1980s.

The local telephone company includes the calls on a customer’s monthly telephone bill. When the consumer pays the bill, the long-distance carrier receives a percentage and passes the remainder to the pay-per-call company. Most charge by the minute--for example, $5 for the first minute and $2 for each additional minute. Some charge a flat rate--for example, $24.95 for a five-minute recording.

AT&T;, U.S. Sprint, MCI and Illinois-based Telesphere Communications are the long-distance companies now carrying 900-number services.

But consumer groups and an alliance of attorneys general from 10 states assert that the 900 numbers have become vehicles for: fraudulent sweepstakes, games and contests promising phony free prizes and vacation offers; expensive and false offers of credit cards or credit repair; messages from rock or rap singers or teen idol actors aimed at kids who do not understand the costs involved; fraudulent job promotions aimed at the poor and unemployed; and high-priced gab or sex-talk lines that lure teens.

Industry officials admit that there is a problem but claim that it is not widespread.

“The vast majority of callers receive good value for their money,” said Thomas Pace, who heads the Information Industry Assn., a trade group representing some 600 pay-per-call companies. “A tiny minority of scam artists hog the headlines, tarnish the industry’s reputation, discourage innovative services and close off new markets.”

Some legitimate 900-number services include: stock market quotes, financial information and computer services, travel information, sports scores and charitable fund-raising.

But the horror stories abound.

One suburban Cincinnati teen piled up $40,000 in 900-number calls in seven weeks by repeatedly calling “The Ultimate Pleasure Connection.” One Pennsylvania couple sought a second mortgage for their home after their son racked up $8,000 in calls to a quiz line. A Seattle television commercial urged children to call Santa by holding the telephone up to the television speaker, which produced tones that automatically dialed the 900 number and billed the caller.

Irwin Popowsky, head of the Pennsylvania consumer advocacy office, called 900-number fraud even worse than other scams or cons.

“With a 900 number, you don’t have to ‘buy’ anything--the call itself is the scam,” Popowsky added. “Once you have spent 10 minutes on the telephone to figure out what someone is trying to sell you, you’ve already bought it. That is, you’ve invested 10 minutes at $2 or $3 or $5 per minute. And, even if you hang up at that point, you’ve spent a substantial amount of money for nothing.”

The FCC will not decide until late May, after a public comment period, whether to implement its proposed regulations, issued March 14 after the legislation in Congress began building momentum.

Gordon’s bill is the most sweeping.

It would require an introductory message, or preamble, detailing the cost per minute and the nature of the service provided, allowing the caller to hang up without being charged. In addition, it would require phone companies to provide consumers with a free block to 900-number access, the separate 900-number charges from long-distance charges and prevent telephone service disconnections due to non-payment of 900-number charges.

Gordon’s measure also would allow consumers who dispute 900-number charges to receive a waiver or refund. And it would mandate that all advertising for 900 numbers clearly state both in print and verbally the charges, billing process and any restrictions on use by children.

McCain’s version includes the preamble, access blocking and advertising provisions, while also requiring an announcement that adult permission is needed for calls by minors and bans television advertisements that emit beep tones that, like a Santa line in Seattle, automatically dial the 900 number.

The FCC’s proposed rules require a preamble, phone blocking and no service cutoff stemming from 900-number charges.

McCain said his legislation is designed to weed out corruption while not harming a growing industry.

“What we want to do is correct the evils, but not throw the baby out with the bath water because there’s a lot of 900-number services that are very helpful,” McCain said.

Mary Beth Richards, the FCC’s enforcement chief overseeing telephone companies, said the FCC is not necessarily going to adopt the proposed standards, but said the agency is “intent on taking some action.”

She said one-fifth of all the gripes from consumers heard by the agency are about 900 numbers.

“It’s our biggest area of complaint right now,” Richards said.

Gordon said there are “glaring omissions” in the FCC proposals, particularly failing to address advertising fraud.

“The FCC either can’t or won’t provide the adequate protections for consumers,” Gordon said.

Gordon said Congress should press ahead with legislation even if the FCC adopts the proposed rules.

Industry official Pace said these proposed regulations are unnecessary because the problems can be solved with “vigorous enforcement of existing consumer protection laws.” Pace called the proposed preamble requirements “kill messages” that would intrude upon the industry’s free-speech rights by dictating what a company says and how it says it.

“The bottom-line question is: What legitimate business is going to be afraid to tell its customers what they’re going to receive and what it’s going to cost,” Gordon said.