Radio Shack and AT&T are facing a class action lawsuit alleging that they violated Oklahoma consumer protection laws by failing to adequately disclose limitations on a recent promotion.
In December, Radio Shack offered the Acer Aspire One notebook for just $99. Even with the prerequisite that customers sign up for two years of AT&T mobile broadband service for about $60 a month the deal still seemed too good to be true. As it turns out, it probably was.
Billie Parks brought suit against both companies in U.S. District Court for the Western District of Oklahoma, alleging that the terms and conditions of her laptop purchase failed to indicate that she would be charged exorbitant fees for exceeding a pre-set five gigabyte limit on the computers built-in wireless connection.
Parks was shocked when she received her first bill, which totaled more than $5,000. She says she was unaware that exceeding the gigabyte limit would result in any charge, let alone one more than 80 times her monthly internet fee.
The lawsuit alleges that, Although the customer service summary informed plaintiff and other consumers that their first bill might be higher than expected because of a $36 activation fee, one months service billed in advance, and prorated charges and fees for the month when the customer signed up, neither plaintiff nor other consumers were informed, nor could they have reasonable discerned from the paper work that wireless Internet usage exceeding 5GB per month would result in astronomical charges running into the thousands of dollars.
The lawsuit alleges counts under Oklahoma consumer protection statutes and common law fraud, charging that Radio Shacks advertising of the DataConnect plan was false, misleading, and inaccurate.
Parks is seeking restitution for the extra charges she incurred, consequential damages for harm to her credit rating, an injunction to prevent AT&T from enforcing the extra fees, and, most consequentially, an end to DataConnect contracts altogether.
On the go
The plan offered unique appeal for anyone constantly on the go. The Acer notebook sports a compact 8.9 inch screen and weighs less than three pounds, and sports wide-area network capabilities, a WiFi connection, and a built-in webcam . Without the AT&T plan, the computer generally sells for about $300.
The relevant AT&T terms and conditions provide that, If you are on a data plan that does not include a monthly megabyte allowance and additional data usage rates, the parties agree that AT&T has the right to impose additional charges if you use more than 5 gigabytes in a month.
The suit threatens to stymie the recent trend toward built-in wireless plans similar to DataConnect. Such arrangements have been gaining popularity in recent years, since they allow consumers to travel without having to make sure that a nearby hotel or coffee shop will be able to provide them internet access. At the very least, the suit threatens to make consumers think twice before entering into any such plan, no matter who is offering it.
And the filing doesnt exactly come at a great time for Radio Shack, which reported a 39 percent drop in earnings late last month. The company posted these dismal numbers despite a recent surge in sales of digital-box converters in anticipation of the upcoming switchover to digital TV. An analyst told the Wall Street Journal that the retailer is likely headed for its worst-ever same-store results in 2009. And now they will have a class action to contend with as well.