Internet telephone provider Vonage says it will pay $3 million to 32 states who sued the company on behalf of consumers. Without admitting to any wrongdoing, Vonage also said it would give refunds to affected consumers and change its business practices.
Since 2002, Vonage has offered a Voice over Internet Protocol (VoIP) service, which allows for telephone voice transmission over a high-speed Internet connection. In its newspapers, TV, direct mail and Internet advertising, Vonage failed to clearly communicate to prospective customers that they must be equipped with high-speed Internet in order to use its services.
Many customers, particularly senior citizens, were not clearly informed of this requirement and were unable to use the service. Yet Vonage required them to pay activation/cancellation and return shipping fees for computer-related equipment. Today’s agreement makes full and clear disclosures a priority requirement.
Similarly, the states argued that Vonage’s "free trial" or "risk free" offers put many at a disadvantage when they attempted to cancel their service at the close of the trial period. Customers who chose to cancel had to do so by telephone and receive a "return authorization number" before returning Vonage`s VoIP computer device. Many customers reported unreasonably long wait times before reaching a company representative.
Through this settlement, Vonage is held accountable for customer service and advertising practices that led Ohioans to be confused and dissatisfied," said Ohio Attorney General Richard Cordray. "As a result, consumers who had an issue with the company as far back as 2004, still have the opportunity to get a refund by filing a complaint with my office within the next 120 days."
Consumer confusion
Customers who thought they had canceled the service complained that they continued to receive monthly bills from the company. Others asserted that Vonage debited funds from their checking accounts, even after the customers attempted to cancel their Vonage service. The assurance of voluntary compliance prohibits Vonage from billing any customers after they have canceled within the free trial period.
"This agreement is designed to ensure that Vonage fully discloses all of its fees and conditions for the services it offers," said Illinois Attorney General Lisa Madigan. "It is also a helpful reminder that consumers should always read the fine print before signing up for a telecom service to search for any extra costs associated with enrolling in programs or services."
The states` investigation found that Vonage’s use of the phrase "free trial" was deceptive. Despite free service offers, Vonage charged many customers activation fees, shipping and handling fees, taxes, universal service fees, regulatory recovery fees and emergency 911 fees, none of which were clearly disclosed in advance.
The agreement prohibits future misrepresentations of service by Vonage and requires the company to fully and clearly disclose all terms associated with promotional offers. Vonage must also ensure that customers who accept the free trial offer receive the VoIP computer adapter within the promised seven to 10 days. Many complained of not receiving the device until near the end of the trial period, which restricted their ability to try out the service over time.
Under today`s agreement, Vonage is also paying refunds to eligible customers who experienced problems and have not already received refunds.
