Internet phone service provider Vonage Holdings has agreed to pay $3 million to South Carolina and 31 other states to settle an investigation into some of its business practices.
In a filing this week with the Securities Exchange Commission, the company said it also agreed to provide refunds to affected customers.
Among the complaints:
- Consumers said they found it difficult to cancel their service with Vonage amid pressure from the company to keep their accounts.
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- Vonage failed to clearly tell potential customers that they needed to have high-speed Internet service to use Vonage, which offers cheaper calls by sending voice data over the Internet just like e-mail and Web pages. Officials said those unable to use the service had to pay cancellation and other fees.
Maine's attorney general, Janet Mills, said Vonage will revise what it discloses regarding offers of "free" services, money-back guarantees and trial periods.
Holmdel, N.J.-based Vonage said there was no finding of any wrongdoing or violation by the company. In the SEC filing, Vonage said it agreed to make unspecified changes to its business practices, some of which the company had already implemented.
The 32 states are sharing the $3 million settlement to cover legal and other costs, and any refunds owed by Vonage are on top of that amount. Claims can be filed through attorneys general for the participating states.
Besides South Carolina, the other states participating in the settlement are Alabama, Arizona, Arkansas, Connecticut, Florida, Hawaii, Idaho, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maine, Michigan, Missouri, Montana, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oregon, Pennsylvania, South Dakota, Tennessee, Texas, Vermont, Washington, West Virginia and Wisconsin.
Wisconsin launched the investigation in November 2007.