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GPSPS Penalized $9 Million For Cramming, Slamming … & Chutzpah!

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Reporting an amusing crime story (amusing, that is, unless of course you’re one of the victims): Last year, the Federal Communications Commission levelled a hefty $9,065,000 fine against GPSPS, Inc., an Atlanta, GA-based telco, for its aggravated misbehavior (because continuing, “willful and repeated,” and conspicuously outrageous) against its own subscribers, which included “slamming” (switching customers’ long-distance carriers without their permission), “cramming” (piling unauthorized and illegitimate charges onto monthly bills, usually for “services” such as Your Daily Horoscope, Celebrity Gossip, or The Joke of the Day), and then concocting an elaborate fraud to cover up the malfeasance.

Specifically, the FCC alleged (in FCC 15-26, “NOTICE OF APPARENT LIABILITY FOR FORFEITURE,” In the Matter of GPSPS, Inc. Apparent Liability for Forfeiture, File No.: EB-TCD-14-00016988, NAL/Acct. No.: 201532170011, FRN: 0022128334) that GPSPS secretly reassigned its customers’ designated long-distance providers, added spurious items to their billing statements for novelty services either never requested or never provided (but, in any event, never authorized by the recipients), and then compounding the wrongdoing, both by lying to authorities about its deceptive (and outlawed) procedures, and then by producing falsified “evidence” offered up as “proof” that the changes and charges were actually bona fide! It’s that last perfidy that raises this cautionary tale to the depths of true ridiculosity.

GPSPS’s surreptitious shenanigans had not gone undetected by its customers; over 150 complaints were made against it to the Better Business Bureau, the Federal Trade Commission, the Texas PUC, and the FCC, which was prompted to investigate and respond. Its policing branch, the Enforcement Bureau, confronted GPSPS with the slamming and cramming allegations, and with customers’ contentions that their duly-submitted appeals to the provider for correction had not been satisfactorily addressed.

In response, GPSPS straight-facedly declared to investigators that the contested changes were all completely legitimate and in fact authorized by each customer – and that GPSPS possessed documentary evidence in the form of audiotape “verifications” to prove it! In its initial reply to complaining clients, GPSPS claimed that it had made sound recordings of calls “they or someone in their household” had made to GPSPS requesting the additional or altered services. When the tapes were subsequently played back to their ostensible originators, the FCC reports that, without exception, “consumers who listened to the recordings informed the Enforcement Bureau that the recordings were fabricated and adamantly denied that the voices on the recordings were their own.”

It’s now clear that GPSPS apparently created – out of whole cloth – sound recordings purporting to document customers’ requesting the service changes. Management had had someone – most likely, an employee – intone a bogus script into a microphone to produce phony “evidence” that was ever-so-easily discredited when examined in the most direct way: by playing the recorded messages back to their purported authors, a test that instantly decimated the tapes’ credibility. (File this under “What were they thinking?” and as reminder that, so very often, crooks are simply not the brightest bulbs in the chandelier of life.)

Consequently, GPSPS’s very expensive punishments now are intended to address not only its slamming and cramming offenses, but its comically fraudulent efforts to conceal them, as well – proving once again that, with a little effort and imagination, one can always make a bad situation worse – or turn it into a Keystone Kops-style routine of accumulating ineptitude and silliness. The FCC is entitled to the last laugh here – plus $9 million!

In a totally unrelated matter: Updating, slightly reversing, and adding a pleasing grace note to a Telecom Taxation blog-posting from October 21, 2013 (“Texas to Reap Telecom Tax On Farmers’ GPS Service”), it is gratifying to record that the Texas legislature has enacted an exemption from State Sales & Use Tax for an important segment of the new services described in that report: Any “telecommunications services exclusively provided or used for navigating machinery and equipment exclusively used or employed on a farm or ranch in the building or maintaining of roads or water facilities or in the production of food, grass, animal feed, or other agricultural products sold in the regular course of business” are, as of January 16, 2016, duty-free on purchase, creating an inviting tax incentive for tech-savvy farmers.

About the Author: Marc Palmer Kram is a Senior Tax Analyst at Wolters Kluwer Tax & Accounting US, where he performs quality control and troubleshooting on the vast taxability database supporting its best-in-class CCH tax-compliance software, and then sometimes writes about what he finds. Learn more about him by visiting his author bio page. Learn more about Wolters Kluwer at WoltersKluwer.com and SalesTax.com.

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