*consumer Refund Notification*
NEW YORK, NY (January 7, 2008) - Attorney General Andrew M. Cuomo today announced that PeoplePC, a wholly owned subsidiary of Earthlink, Inc. (NASDAQ: ELNK), has agreed to halt the deceptive marketing of its dial-up Internet service and refund consumers who were billed excessive amounts in undisclosed charges. PeoplePC has approximately 1.6 million subscribers nationwide and 50,041 across New York State.
Attorney General Cuomo urged consumers across the state who incurred excessive charges from PeoplePC to submit refund claims directly to Earthlink, Inc by May 20, 2008. Refund Claim Forms are available at www.ag.ny.gov
"This settlement with PeoplePC provides relief to consumers misled into making purchases with false statements and deceptive advertising,” said Attorney General Andrew Cuomo. “Consumers should not be misled into making purchases they would otherwise steer clear of. This settlement sends a message to companies large and small - delivering a product is simply not enough, the promises must be delivered as well.”
The Attorney General’s investigation found that while PeoplePC prominently advertised its dial-up internet service as unlimited and low-cost, offering local telephone connections to access the internet at prices as low as “$5.47 per month for the first 3 months,” several consumers incurred more than $500 in undisclosed long-distance charges while using the service.
According to the Attorney General’s findings, PeoplePC claimed in its own advertisements and those on the American Association of Retired Persons (AARP) website, to provide fast, easy connection in just one click through its "Smart Dialer," a service that could automatically choose the “fastest and most available phone numbers” within a local area. However, PeoplePC’s "Smart Dialer" program would sometimes select non-local telephone numbers subjecting dial-up customers to pricy by-the-minute toll access charges, a practice the company failed to disclose. As a result, some unsuspecting consumers incurred telephone long-distance charges far in excess of the advertised monthly cost of the local dial-up service.
Under the terms of the settlement with the Attorney General's office, PeoplePC has agreed to:
- Clearly and conspicuously disclose any hidden charges consumers may incur in addition to the advertised monthly rate;
- Provide refunds to customers across New York State who incurred long distance charged by using telephone access numbers suggested by PeoplePC. Customers may claim up to three months' account service charges and one month's telephone charges for calls made using a telephone access number suggested by PeoplePC;
- Pay to the State of New York $20,000 in penalties and costs.
New York customers who incurred charges by using telephone access numbers suggested by PeoplePC are encouraged to submit claims for refunds. Refund Claim Forms must be filled out and submitted directly to Earthlink, Inc., by May 20, 2008 at the following address: Earthlink, Inc.,1375 Peachtree Street, Atlanta, Georgia, 30309. To download a copy of the Refund Claim Form, visit www.ag.ny.gov
The case was handled by Assistant Attorney General Karen Geduldig of the Internet Bureau under the supervision of Justin Brookman, Assistant Attorney General-in-Charge of the Internet Bureau.
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