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PeoplePC Settles Deceptive Marketing Case

Earthlink subsidiary will refund hidden charges

January 9, 2008 

"This settlement with PeoplePC provides relief to consumers misled into making purchases with false statements and deceptive advertising,” said New York Attorney General Andrew M. 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,” Cuomo said.

The 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 Cuomo’s findings, PeoplePC promised in its own advertisements and those on the 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, that program would sometimes select non-local telephone numbers subjecting dial-up customers to pricey 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, PeoplePC has agreed to:

• Clearly and conspicuously disclose any hidden charges consumers may incur in addition to the advertised monthly rate; and

• 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.

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