A lawsuit alleging CenturyLink fired a former employee because she told its CEO that customers were being falsely charged for accounts they didn't open is already having impact on the company's stock.
CenturyLink Inc. (NYSE: CTL) stock dropped almost 8% in the wake of the lawsuit, which also claims the company put pressure on sales personnel to rack up new service sales, leading them to falsely open new accounts that weren't authorized by clients, similar to the scheme uncovered at Wells Fargo last year.
CenturyLink acquisition target Level 3 Communications also saw its stock suddenly drop, although both stocks regained about half their losses in afternoon trading.
CenturyLink is saying it is taking the charges seriously and investigating the claims by former employee Heidi Heiser. In a statement emailed to Light Reading, spokesman Mark Molzen points out, however, that the company maintains an "integrity line" for employees to report any issues and Heiser did not use it.
"CenturyLink holds itself and its employees to the highest ethical standards and does not condone any type of unethical behavior," Molzen said in his statement. "The allegations made by our former employee are completely inconsistent with our company policies, culture and Unifying Principles, which include honesty and integrity. Should an employee have any concerns about ethics or compliance issues, we have an Integrity Line in place, 24 hours a day, seven days a week. This employee did not make a report to the Integrity Line and our leadership team was not aware of this matter until the lawsuit was filed. We take these allegations seriously and are diligently investigating this matter."
The issue for CenturyLink could be whether the lawsuit leads to further investigation of its sales practices. Heiser claims she was fired two days after she used a companywide Q&A session over an internal messaging system to alert CenturyLink Chairman and CEO Glen Post to what she says was widespread activity by sales associates to falsely claim customers had authorized new services in order to meet sales goals/incentives.
Heiser's lawsuit claims the company was charging "many millions" of dollars in unauthorized charges, according to this Bloomberg News account. It doesn't say how she knew of that volume, as someone who worked from home for CenturyLink for a little more than a year. Heiser's lawsuit also says she reported the issues to her supervisors, who essentially ignored the complaints, and adds that a malfunctioning call distribution system led to dropped calls on her watch, for which she was held responsible. Those calls were given as the cause of her firing.
— Carol Wilson, Editor-at-Large, Light Reading