On October 14, 2011 the Iowa Supreme Court held that a prison telephone company did not commit a “cramming” violation by improperly billing a third party for fraudulent collect calls made by a prisoner.

Evercom Systems, Inc. provides phone services to more than 2,900 detention facilities nationwide, including the Bridewell Detention Center (Bridewell) in Bethany, Missouri.
On January 25, 2006, Evercom informed Iowa resident Ken Silver that on the previous day “over fifty dollars of collect calls had been accepted by his (Des Moines, Iowa) business line and that Evercom was placing a temporary block on his line.”

Silver denied accepting or having any knowledge of the calls. Evercom agreed to investigate and get back with him in 7-10 days. The next day, however, the company sent Silver a letter stating the charges would not be removed because “a thorough investigation” found no system deficiencies. Silver did not receive the letter because Evercom mailed it to an incorrect address; his local telephone company billed him $78.21 for the collect calls.

After several unsuccessful attempts to get Evercom to remove the charges, on February 27, 2006, Silver filed a complaint with the Iowa Attorney General’s office. Evercom quickly investigated and “concluded that the calls were not made to Silver’s business but [were] the result of glare fraud” perpetrated by a Bridewell prisoner and an outside third party.

“Glare fraud occurs when one caller dials into a telephone number associated with a particular telephone line (called a trunk) at the same time a caller is dialing out over the same trunk ... the two callers will simultaneously seize the ends of a single trunk and the charges will be billed to the number being dialed out over the trunk rather than to either of the persons on the call, even though the owner of the outgoing number will never actually be involved in the call.”

Evercom finally credited Silver’s account on March 22, 2006. Eight days later, Silver’s complaint was forwarded to the Iowa Utilities Board (Board). “The Office of Consumer Advocate (OCA) petitioned the Board for a determination that Evercom had committed a violation of a statute or rule regarding cramming and requested that the Board impose a civil penalty.”

Cramming “is the addition of a product or service to a customer’s account, for which a separate charge is made, without that customer’s verified consent.”

An administrative law judge found “it was undisputed that Silver did not receive or accept the [fraudulent] collect calls from Bridewell ... ‘there is no question that a cramming violation occurred and that Evercom violated Iowa Code section 476.103 [rule 199-22.23]’ when it billed Silver for five unauthorized calls.” As a result, the Board imposed a $2,500 civil penalty against Evercom.

The company appealed, and a state district court determined that there was no cramming violation, no statute or rule had been violated and the civil penalty should be rescinded. The Iowa Court of Appeals reversed and reinstated the penalty.

Evercom then appealed to the Iowa Supreme Court, which reversed the appellate court, holding that “a proper reading of the rule excludes all disputes regarding billing for collect calls from the definition of cramming.” As defined in rule 199-22.23(1), cramming “cannot include mistaken or improper billing of collect calls, particularly when it is the result of third-party fraud.” Therefore, the Supreme Court concluded that “the district court properly invalidated the Board’s decision and rescinded the civil penalty.” See: Evercom Systems, Inc. v. Iowa Utilities Board, 805 N.W.2d 758 (Iowa 2011).

Related legal case