New York-based ISP Juno Online Services Inc. agreed Monday to settle charges by the Federal Trade Commission (FTC) of deceptive advertising for its “free” and fee-based dial-up Web access services.
A statement from the FTC said Juno reached a consent agreement that advertising for some of its Internet access services was “deceptive, in violation of Federal Law.” While not admit any wrongdoing, Juno agreed to change the way its ad campaign is represented and said it would reimburse certain former subscribers for long distance telephone charges.
Juno spokesman Gary Baker told atNewYork the reimbursements were “fairly narrow” and would affect only a small number of former subscribers. “The agreement (to issue reimbursements) is really minimal and will not have any material effect on our business.”
Baker would not say how many customers would be issued reimbursement or how much it would cost the ISP, which offers free and paid dial-up Web access service to approximately 4.1 million active subscribers throughout the U.S. About 910,000 subscribers now pay for Juno’s ISP service.
According to the FTC, Juno engaged in several deceptive practices that made it “unreasonably difficult” for some consumers to cancel its so-called “free” trial period for its Premium Internet service, causing these consumers to be billed for service they no longer wanted.
Other FTC allegations include the charge that Juno also failed to disclose adequately that some subscribers to its Internet services would incur long distance telephone charges while connecting to the Internet.
“Juno has agreed to stop misrepresenting the cost of its Internet services, to clearly and conspicuously disclose the cancellation terms for these services, to provide adequate customer support to handle consumer requests to cancel, and make prominent disclosure of long distance telephone charges that some consumers may incur while using its Internet services,” the FTC said.
On those charges, Baker said Juno’s advertising policies and practices were “highly comparable” to those of its major competitors. “It is good that the FTC wants to improve these practices. The specific issues as outlined in the consent disclosure have all been addressed.”
“(Juno’s) so-called ‘free’ Internet access offers were anything but,” said Jodie Bernstein, Director of the FTC’s Bureau of Consumer Protection. “Information about fees was hidden in the fine print. The relevant conditions of any offer should be disclosed clearly and conspicuously so that consumers can make their purchases based on the facts.”
The federal watchdog group said the deceptive advertisements appeared in major newspapers, television commercials, radio, direct mailings, as well as online banner ads and on the company’s Web site.
Under the terms of settlement, agreed in a 5-0 vote by FTC members, Juno was barred from engaging in similar acts and practices in the future. “Future misrepresentations about the price or cost, cancellation terms and duration of free trial periods for electronic-mail, Internet and other online services are prohibited.”
“The agreement also would ban Juno from falsely representing that Internet service is available for purchase when it is not. In addition, Juno would be prohibited from beginning a free trial period or billing cycle for any Internet service until the consumer is first able to use the service.”
Juno is now required to “disclose clearly and conspicuously” affirmative obligations that consumers have to cancel their Internet service. The settlement also will require that Juno prominently disclose its cancellation policies and procedures during registration, and at least make this information readily available on its Web site and through a toll-free telephone number.
The company must also provide consumers a way to cancel their Internet service through a toll-free telephone number and e-mail. According to the consent agreement, if Juno makes a cost claim for Internet service advertised with another product or service, it must also clearly and conspicuously disclose cancellation penalties and possible long distance telephone charges.