If a company sends you a check for a couple of bucks, for no reason at all, don't think they're just being generous. Cash the check, and you could find yourself signed up for a service you don't really want.
The state of Oregon has filed a civil racketeering lawsuit against an Arizona Internet service provider, charging that it attempted to dupe thousands of businesses and non-profit organizations into depositing negotiable checks that the company claimed were actual contracts for Internet services.
Named in the lawsuit is Simple.net, Inc. of Mesa, Arizona, formerly Dial-Up Services, Inc. doing business as Simple.net.
In the lawsuit, the Oregon Department of Justice (DOJ) contends that Simple.net, from January 1, 2003 through November 2005, mailed over 195,000 solicitations into the state containing "activation" checks of under $3.35, which when cashed according to Simple.net created a contract to pay a monthly charge of $l6.95 or more for dial up internet access.
The alleged victims deposited the checks thinking they were small refunds or payments on small debts, not a contract for services. DOJ claims the company continued charging the recipient's local phone bill or through a draw on a checking account even after the marketing practices had stopped. Most customers never used the Internet service or even knew they had purchased it.
"This is the fifth major investigation that the Department has undertaken concerning the use of 'activation' checks," Oregon Attorney General Hardy Myers said. "We will continue to be a leader in efforts to protect small businesses and non-profits from deceptive solicitations for services such as Internet access and yellow page advertising."
The lawsuit asks for a civil penalty of $250,000, attorney fees and investigative costs and the forfeiture of all monies and property derived from or used in the alleged illegal conduct. The suit also requests restitution for all victims, who paid the defendant for unwanted and unused Internet access billed.
In addition, the lawsuit seeks a permanent injunction prohibiting the company from using "activation" checks to solicit business in Oregon.
Simple.net, meanwhile, has filed a lawsuit in federal district court in Arizona against the states of Oregon, Missouri, North Dakota, and Idaho, asking that the states' investigation should be terminated because the company had entered into a court settlement with the Federal Trade Commission in 2001 about its use of "activation" checks. Simple.net's suit against the states was dismissed for lack of jurisdiction, but is on appeal.
Of the group of 30 states, Idaho and North Dakota are litigating with Simple.net over its alleged failure to provide investigative discovery and Missouri has sued the company under its consumer protection law; that lawsuit is pending.
FTC action
In 2001, the Federal Trade Commission filed a request for a permanent injunction to bar the company's alleged misrepresentations of Crammers Settle FTC Charges and require them to send customers who signed up for their service confirmation notices giving the consumers the opportunity to cancel and receive a refund.
