ST. PAUL — Attorney General Mike Hatch has sued a long-distance telephone company, accusing it of switching the long-distance service of thousands of Minnesota businesses and residents without their permission.

Hatch accuses Michigan-based LCR Telecommunications of consumer fraud for «slamming,» the industry term for switching phone service without permission. The lawsuit, filed Wednesday in Ramsey County District Court, seeks unspecified restitution and damages.

An LCR spokesman, Martin Tibbitts, said he hadn’t seen the court filings and couldn’t immediately comment.

Some shady phone companies get consumers to switch service with misleading pitches or trick e-mails, but LCR took a novel approach, Minnesota officials said: Its telemarketers posed as business owners and OK’d the switches.

«This is definitely the most offensive case we have ever seen,» Chief Deputy Attorney General Kris Eiden said at a news conference. «It’s just beyond belief.»

Officials played recordings of several phone conversations in which telemarketers hired by LCR posed as the account holder and agreed to switch phone service. One telemarketer identified himself as Richard Lambert, owner of R. C. Lambert & Associates of St. Paul. When asked to verify his date of birth, he said it was in January.

But the real Richard Lambert, who was present at the news conference, said that’s not true.

«I’m the real Dick Lambert, and actually, my business is in Roseville, not St. Paul,» Lambert said. «I wasn’t born in January. The conversation was obviously totally bogus.»

LCR’s tactics enabled it to grow its Minnesota customer base from four accounts in January 2003 to more than 2,700 customers 16 months later, Eiden said. The total amount due to affected consumers could approach $1 million.

Hatch’s office cannot bring criminal charges, but Eiden said she would refer the case to the proper authorities for prosecution.

Hatch said the case is a lesson to consumers.

«With telephone companies and telemarketing, it’s buyer beware,» he said. «Don’t trust these people. They’re there to take your money.»

WASHINGTON (Reuters) — One in six U.S. adults was victimized by fraud over the course of a year, from long-distance phone service switched without their permission to magazine subscriptions that never arrive, the U. S. Federal Trade Commission said on Thursday.
Some 25 million Americans paid for loans that never came through, signed up for illegal «credit repair» services that didn’t improve their credit scores, or otherwise lost money in fraudulent scams, the FTC reported.

Another 14 million had their long-distance phone service switched without their permission, a practice known as «slamming,» the FTC said in its first-ever survey of consumer fraud.

The survey of 2,500 consumers was taken late May and early June of 2003. It had a margin of error of plus or minus 2 percent. An FTC statistician said the time since the survey was taken was spent analyzing the results and compiling the report.

Many of the most common scams revolved around credit. Advance-fee loans that charge a fee for loans or credit cards that never arrive were the most common. Unnecessary credit-card insurance was another common scam -- by law, credit-card users already don’t have to pay for charges above $50 they don’t authorize.

Others were billed for memberships in «buyers’ clubs» without their permission, paid money for prizes that never arrived, or were taken in by pyramid schemes, the FTC said.

Only 8 percent reported these schemes to authorities, said Howard Beales, head of the FTC’s consumer-protection division.

«We wish more people would complain, because then we would have information about where the problems are,» said Beales, who is scheduled to end his term at the agency tomorrow.

American Indians were most likely to be fraud victims, with one in three reporting they had experienced fraud during the period surveyed, from May 2002 to May 2003. Other racial and ethic minorities were also somewhat more likely to be fraud victims than whites.

People struggling with a heavy debt load and those who expected their incomes to rise significantly were most likely to fall victim to fraud, the survey found.

The survey found no significant variations by income or educational level.

Victims most frequently found out about a fraudulent offer through print advertising, followed by telemarketing and the Internet, the survey found.