Attorneys general in 32 states are calling on Vonage to change its marketing practices. The company, one of the nation's largest providers of Internet-based phone service, will refund eligible customers and pay $3 million to the states to resolve concerns about its billing and cancellation policies.
"Vonage customers who complained about hang-ups such as unexpected fees or difficulties cancelling the service may be eligible for refunds under this settlement," Washington Attorney General Rob McKenna said.
Attorneys general conducted a 16-month investigation into Vonage's services in response to consumer complaints. The company denied any wrongdoing but agreed to provide refunds and adhere to certain limitations on its marketing practices, as laid out in today's settlement. Washington filed its version of the agreement today in Thurston County Superior Court.
Senior Counsel Paula Selis, an assistant attorney general who heads up the Consumer Protection High-Tech Unit in Washington state, said more than 400 Washington consumers have complained about Vonage's services.
Selis said some consumers complained that their trial periods were shortened because they had to wait for equipment to arrive or for their old phone number to be moved to their new Vonage account. Others who responded to "free" trial services weren't aware they would be charged an activation fee, shipping and handling, taxes and other fees. Some elderly consumers complained they weren't aware they needed high-speed Internet service in order to use Vonage.
"Today's agreement seeks to prevent future problems by compelling Vonage to revise how it discloses 'free' trials and money-back guarantees," Selis said.
Vonage formerly paid incentives to customer service representatives for retaining or "saving" customers who called to cancel. As a result, consumers reported that cancellation was extremely difficult and sometimes impossible. The settlement puts strict limitations on this practice and requires recording and verification of these telephone calls.
Consumers who filed certain unresolved complaints about Vonage with the Attorney General's Office since January 2004 are eligible for a refund. Qualifying consumers who file new complaints by March 16, 2010, will also receive refunds. Complaints can be filed online at www.atg.wa.gov or consumers may request a form by mail by calling 1-800-551-4636 between 8 a.m. and 3 p.m. weekdays.
Eligible consumers include those who:
• Attempted to qualify for the money-back guarantee but were prevented from cancelling and getting their money back due to Vonage's practices.
• Alleged they weren't informed of any limitations on minutes, coverage areas, international usage or calls to cell phones and therefore accrued costs.
• Attempted to cancel service but continued to be billed.
• Claimed they paid shipping fees and other costs that weren't disclosed.
• Alleged they weren't informed they needed high-speed Internet and therefore attempted to cancel.
• Didn't receive discounted or promotional services or equipment they were offered.
• Qualified for a rebate they didn't receive.
• Alleged they were charged for services they didn't order.
In addition, Vonage will pay $3 million to the states to cover attorneys' fees and legal costs or to supplement consumer education programs. Washington's share is $45,000.
Participating states include Alabama, Arizona, Arkansas, Connecticut, Florida, Hawaii, Idaho, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maine, Michigan, Missouri, Montana, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oregon, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Vermont, Washington, West Virginia and Wisconsin.