In similar settlement, Juno Online Services Tuesday agreed to change its advertising practices and reimburse some customers to settle FTC charges the Internet provider's advertising for free and fee-based services was deceptive.
Gateway's settlement deal with the FTC stems from a "free" Internet access offer the company had made to customers who bought its personal computers.
The settlement bars the company from "misrepresenting the price or cost of any service to access the Internet or other electronic network" and requires the company to pay redress to customers who ended up paying US$3.95 per hour for a 'toll-free' number to connect to the service.
Gateway had advertised its Gateway.net Internet access plan as being free for one year with the purchase of a Gateway Essential computer.
Difficult to cancel
The FTC said Juno made it unreasonably difficult for consumers to cancel free trial periods for its premium Internet service and that the company did not disclose that connecting to their service would incur long-distance telephone charges.
"Information about fees was hidden in the fine print," said Jodie Bernstein, director of the FTC's bureau of consumer protection. "These so-called 'free' Internet access offers were anything but."
Juno agreed to change its advertising practices to better spell out costs and reimburse some of its former customers for long-distance telephone charges incurred to access its services, the FTC said.
"All the issues have been addressed," said Juno spokesman Gary Baker. "Our current practices for disclosure and customer service are now well above the industry norm."
He said the amount of reimbursements has not been determined but that it would not have a material affect on the company's business.
The consumer protection agency said some advertisements offered 150 hours of Juno Internet service but did not disclose adequately that consumers had to use the hours within a month.
Other customers had to wait up to two weeks to receive software to access Juno's system and therefore had a shorter time to access the Internet for free, the FTC said. Some consumers continued to use the service and were unknowingly billed, the agency said.
For those customers who did not live where there was a local dial-up connection, Juno did not disclose in its advertisements that long-distance charges would apply. It also failed to tell customers of cancellation fees for rebate programs that required a year subscription, the FTC said.
