Cox Communications sales representatives are accused of creating fake accounts and adding extra services to existing customers’ bills without authorization in hopes of scoring monthly bonuses of $10,000 or more.

WJLA-TV’s I-Team reports two whistleblowers have come forward to tell the Washington, D.C. station Cox employees are still defrauding customers to line their own pockets, despite repeated attempts to alert senior management and company claims the fraud was limited to a few now ex-employees.

“How far they’re going for a commission payout, to affect thousands of people, it’s a heinous, greedy act,” former Cox Communications employee Anna Wilkinson told WJLA. Fraud is allegedly rampant in the Mid-Atlantic region where Wilkinson worked, and it involves hundreds, if not thousands of bogus charges and accounts. Wilkinson reports some customers have had five to seven different accounts opened in their name using multiple addresses. Other customers are discovering services they did not request suddenly added to their bills.

Wilkinson blew the whistle on Cox’s fraud problem.

What motivates sales representatives to get “creative” with customer accounts is Cox’s lucrative bonus system that rewards agents that sign up the most new customers or add services to an existing account. The worst offenders are earning more than $12,000 a month from the fraud, and some have assembled large “black books” filled with valid customer Social Security numbers and other information gleaned from Cox’s customer database.

“Hundreds and hundreds of Social Security numbers, along with people’s first and last names, their address, birthdays” are involved, said Wilkinson. Sources told WJLA a favorite target for the scheme are ex-renters leaving an apartment building. When the disconnect request arrives, the reps use that person’s information to open multiple new accounts around that apartment complex.

“You have sales reps knowing who moves in and out of apartments,” the source said. “So they set up multiple accounts starting with one apartment like ‘Apartment 241.’ Then, another fake account in 540 and Apartment 352. All the fake accounts are then placed under one person’s name that use to live in Apartment 449.”

The representative can return to unsuspecting ex-renter time and time again to make their sales quota and earn bonus commissions.

“Let’s say he sold them cable and internet and added the phone to the service,” the source said. “That’s three sales. Move that person four times that’s 12 sales. If you do that 10 times that’s 120 sales [and] you have over 90 percent of your quota already done.”

Wilkinson said she filed complaints with the Federal Trade Commission (FTC) and the Virginia State Attorney General’s Office.

A representative from Cox Communications issued this statement in response to the report:

“We have stringent ethical and privacy standards that all employees are required to abide by. In instances where those standards are not adhered to, we take immediate action that can result in employee terminations. If there is a situation where a customer’s personally identifiable information is believed to have been compromised, we notify the customer and work with them to rectify. Cox has fraud alert measures in place and have taken other steps to help prevent this from happening. Nonetheless, like many companies, we have had isolated instances of employees not living up to our standards of behavior. Recently we learned of a small number of employees in Virginia who violated our policies. A thorough investigation occurred and those employees have since been terminated. An internal audit was also conducted ensuring that no customers’ personally identifiable information was compromised. We take these matters very seriously, and remain committed to protecting the safety of our customers’ information through our business policies and practices.

WJLA in Washington reports Cox’s sales agents are lining their own pockets opening fraudulent accounts. (3:09)

AT&T has some expensive legal bills to pay facing down the Justice Department’s objections to its recent expensive acquisition of Time Warner, Inc. But no worries, AT&T’s wireless customers will be helping to pick up the tab after another major hike in an “Administrative Fee” that will raise at least $800 million a year for the phone company.

BTIG Research analyst Walt Piecyk caught AT&T hiking its Administrative Fee twice during the last quarter, now reaching $1.99 a month, billed to every post-paid wireless customer.

AT&T introduced the fee in 2013, claiming it would cover some of AT&T’s costs connecting phone calls and managing its wireless network. It started at $0.61 a month, then increased at some point to $0.76.

Although AT&T received negative press after introducing the fee, for most customers it is just one of several barely noticed charges applied in a separate section of monthly bills usually reserved for mandatory government fees and taxes. Many customers assume the fees are mandated by local, state, or federal governments, but in fact many are actually conjured up by AT&T and pocketed by the company. Most analysts believe companies create these fees to raise revenue without the perception of raising rates.

“The Administrative Fee helps defray certain expenses AT&T incurs, including but not limited to: (a) charges AT&T or its agents pay to interconnect with other carriers to deliver calls from AT&T customers to their customers; and (b) charges associated with cell site rents and maintenance.” – AT&T

Customers are now noticing the $1.99 Administrative Fee and complaining about it, after the company nearly tripled it over the last three months.

Fees and surcharges paid by a typical AT&T wireless customer in Illinois.

“In April of 2018, the Administrative fee increased to $1.26 and in June it rose again to $1.99,” Piecyk writes. “We believe the increase applies to all post-paid phone lines other than perhaps some large enterprise contract customers. We have confirmed that it does not apply to pre-paid lines after some customer service reps incorrectly told us otherwise last night. We believe this fee is included in AT&T’s reported service revenue and ARPU despite AT&T’s accounting change last quarter, which stripped regulatory fees and taxes out of both revenue and cost of service.”

Piecyk calculates that if 85% of AT&T’s 64.5 million postpaid wireless customers are now charged the fee, it will result in $800 million of incremental service revenue annually.

Piecyk is skeptical AT&T needed the money to cover cost increases.

“It’s hard to believe that interconnection costs have increased in the past six months enough to justify this fee increase,” Piecyk writes. “In fact, wireless operators have been crediting LOWER interconnection costs when explaining why their cost of service was in decline. Not surprisingly, we don’t recall any reductions in Administrative Fees by AT&T or its peers associated with reductions in interconnection expenses.”

Tower fees, also mentioned by AT&T, may have increased slightly, but as compensation for building out FirstNet, a public safety/first responder-prioritized wireless network, taxpayers are reimbursing AT&T $6.5 billion of FirstNet’s construction costs, despite the fact FirstNet will also benefit AT&T’s ordinary paying customers who will share the benefits of AT&T’s network expansion.

AT&T’s Administrative Fee hike will play right into the hands of T-Mobile, which has an advertising campaign blasting other wireless companies for sneaky fees. (0:45)

New York’s top telecommunications regulator has called Charter Communications a purveyor of fake ads, deception, and broken promises and has again called into question how much longer the company should be allowed to do business in New York State.

The New York State Department of Public Service/Public Service Commission today sent a letter to Charter Communications CEO Thomas Rutledge condemning Spectrum’s false and misleading advertising campaigns and the ongoing deception of New York consumers about its expansion efforts. The letter warned Rutledge Charter must immediately cease and desist airing fake ads about the company’s efforts to expand critical broadband service across the state. The letter also warns that if the misrepresentations and unacceptable way Spectrum conducts its business in New York does not stop, the company could find itself out of business in New York State.

“The situation regarding Charter/Spectrum is getting more serious with each passing day,” Department CEO John B. Rhodes said. “Not only has the company failed to meet its obligations to build out its cable system as required, it is now making patently false and misleading claims to consumers that it has met those obligations without in any way acknowledging the findings of the Public Service Commission to the contrary. Access to broadband is essential for economic development and social equity. Charter/Spectrum’s intentional deception of New Yorkers must end now.”

So far, Charter has ignored the Public Service Commission’s June 14 order demanding Charter indicate full and unconditional acceptance of the 2016 merger agreement and the terms it contained. The deadline for Charter or its attorneys to respond is this Thursday, June 28, 2018. If the deadline passes with no response, the Commission warned it may rescind, modify, or amend the approval order granting the merger, file a lawsuit in the Supreme Court of New York to potentially cancel the merger, and fine Charter for being out of compliance with state law.

Letter from New York regulators to Charter Communications (click image to download or view complete letter).

Charter’s Fake Ads

Rhodes

The letter accuses Rutledge of knowingly misleading New York customers in its advertising and printed materials that claim Charter has fully complied with — and exceeded — its commitments to New York under a merger agreement with the state allowing Charter to acquire Time Warner Cable systems. The letter emphatically states these representations are demonstrably and materially false.

State regulators pointed to Charter’s historic and systematic pattern of false advertising, noting a 2017 lawsuit filed by New York’s Attorney General over the company’s inability to provide advertised speeds has survived several company challenges in court and is moving forward.

The Merger Itself is in Peril

Charter will face the possibility of additional legal troubles as the PSC refers Spectrum’s latest conduct to the Attorney General’s office for possible further legal action. State regulators also suggested Charter was materially deceiving investors in violation of federal securities laws by not disclosing the company’s failure to honor its commitments to New York and warning investors the merger itself was now in significant peril if it is revoked in New York.

Regulators have also put Charter executives on notice that in advance of a possible penalty action by the Commission against the company directly, it further demanded that Spectrum produce records regarding its false representations and preserve all documents, including email, text messages, voice mail, recordings, and other documentation relating to its advertising claims.

A Record of Failure in New York

According to a PSC investigation and a Public Service Commission order, Spectrum missed its required December 16, 2017 build-out commitment to extend its network to pass additional residences and businesses by 12,245 passings. Spectrum also failed to cure, as required, its earlier failure by March 16, 2018. For these two failures, Spectrum was ordered by the Public Service Commission to forfeit $2 million. These failures came on top of earlier failures by Spectrum to meet its commitments. The PSC argues Spectrum has not met a single build-out deadline since the approval of its acquisition of Time Warner Cable in 2016.

The PSC stated that, instead of working to meet its commitments to New York, Charter executives have ignored state regulators as Spectrum knowingly continued to advertise and publish false claims that the company is exceeding its mid-December 2017 commitment made to New York by more than 6,000 locations and is on track to extend the reach of advanced broadband network to 145,000 unserved or underserved locations by May 2020. Both claims are patently false, claims the PSC.

“Spectrum’s failure to meet its build-out commitments hurts unserved and underserved New Yorkers, leaving them without a key public utility service crucial to their future success and well-being,” the regulator wrote.

“Spectrum’s publication of claims that it knows are false harm all consumers who rely on honest and accurate information in choosing suppliers from among competitors,” the PSC wrote. “And when Spectrum continues to advertise and publish false claims even after being directed not to by its governmental regulator, it demonstrates deliberate disregard and lack of respect for the Public Service  Commission, the rule of law, and regulation in New York State. Accordingly, in the name of customers and potential customers, the Department called on Spectrum to set the record straight by advertising and publishing the truth that the company has been found by the Public Service Commission to have failed to keep its buildout commitment to New York State.”

Charter Communications produced this video incorporating similar elements used in its advertising targeting New York consumers. Charter does not mention its investment in rural broadband in New York is not altruistic. It was a core condition the company agreed to as part of a settlement with the New York Public Service Commission to approve the acquisition of Time Warner Cable in 2016. (1:36)

The newest cities getting Charter/Spectrum’s gigabit service.

With the latest additions to the list of Charter Communications’ gigabit-capable cities last week, Spectrum’s gigabit internet service is now available to more than 27 million homes, more than half of its 41-state footprint.

The latest cities to receive gigabit upgrades include Charleston, S.C., Bowling Green, Ky., Cleveland and Toledo, Ohio, Erie, Pa., Orlando, Fla. Hartford, Conn., and Springfield, Mass.

Spectrum is calling the occasion “the summer of gig,” with the promise of another wave of newly upgraded cities by Labor Day.

In addition to the availability of gigabit service, which in reality offers speeds up to 940/35 Mbps, customers should see Standard speeds in many of these locations increased to 200/10 Mbps and the introduction of an improved Ultra speed tier of 400/20 Mbps. Some cities have not yet received a free upgrade to 200 Mbps service, but are expected to sometime over the summer.

Gigabit pricing varies, depending on market, with new Spectrum customers paying $104.99/month for the first year. If you already subscribe to Spectrum service, the rate is $114.99 for Spectrum TV customers and $124.99 a month for non-Spectrum TV customers. There is also a mandatory $199 installation fee which cannot be waived.

This company-supplied video celebrates the arrival of gigabit internet for more than four million additional Spectrum customers. (1:10)

(Reuters) – Comcast Corp offered $65 billion on Wednesday for 21st Century Fox’s media assets, emboldened by AT&T prevailing over the Trump administration’s attempt to block a merger with Time Warner, Inc..

The all-cash offer for Fox’s movie and TV studios and other assets including the X-Men franchise, opens a war with Walt Disney, which has bid $52 billion in stock. Comcast described the bid as 19 percent higher than Disney’s bid today. The transaction does not include the FOX television network, network owned-and-operated local television stations, or its cable news channels Fox News and Fox Business.

Comcast is expected to lead a wave of traditional media companies trying to combine distribution and production to compete with Netflix Inc and Alphabet Inc’s Google. The younger firms produce content, sell it online directly to consumers and often offer lucrative targeted advertising.

AT&T won a court victory over skeptical U.S. antitrust regulators on Tuesday when a federal judge allowed it to buy Time Warner for $85 billion, which was widely taken as a green light for Comcast to submit its expected bid.

Comcast may face more difficulty than AT&T and other would-be acquirers, though, since Comcast already has its own TV and movie studios in the NBC Universal division, a content overlap AT&T-Time Warner lacked.

Shares of Comcast, Fox and Disney were barely changed in after-hours trade.

Comcast in a statement outlined an offer that was similar to Disney’s, including a commitment to the same divestitures. It said that it would agree to litigate any action taken by the Justice Department to block the deal.

In a letter to the Fox board, Comcast chairman and CEO Brian Roberts said, “We are also highly confident that our proposed transaction will obtain all necessary regulatory approvals in a timely manner and that our transaction is as or more likely to receive regulatory approval than the Disney transaction.”

Justice Department lawyers who tried to stop AT&T’s $85 billion deal expect consumers will lose out as bigger companies raise prices, and some lawyers saw that as a concern in a Comcast-Fox deal which would put two movie studios and two major television brands under one roof.

“One cannot ignore the fact that there’s less independent content to go around,” after the AT&T deal, said Henry Su, an antitrust expert with Constantine Cannon LLP.

Still, the AT&T court fight gave Comcast valuable information about how to structure a Fox deal, said David Scharf, a litigation expert with Morrison Cohen.

“Any deal that’s coming down the pike that’s not baked yet knows the government’s playbook. They know what the government is concerned about,” he said. “They can learn how to structure a deal to make it more palatable.”

Disney itself has “surgically” structured a transaction that “might be doable,” avoiding Fox Broadcasting and big Fox sports channels, U.S. antitrust chief Makan Delrahim said last week.

Comcast may have a tough time winning over Fox’s largest shareholder, Rupert Murdoch’s family. They own a 17-percent stake and would face a multi-billion dollar capital gains tax bill if he accepted an all-cash offer from Comcast, tax experts have told Reuters.

Craig Moffett, an analyst with MoffettNathanson, said in a research note that Disney could prevail for other reasons.

“Disney has the superior balance sheet, cost of debt, equity and rationale to emerge victorious over Comcast in a bidding war,” Moffett said.

Reporting by Sheila Dang in New York and Diane Bartz in Washington; Additional reporting by Arjun Panchadar in Bengaluru; Writing by Peter Henderson; Editing by Maju Samuel and Lisa Shumaker.

CNBC reports Comcast has officially submitted its $65 billion all-cash offer to acquire assets of 21st Century Fox. Disney is also a contender and may respond by sweetening its own offer. (2:29)