DOJ: News Release

Bullock Announces Settlement with VONAGE on Cancellation and Cost Issues

Company will refund consumers and modify its cancellation and retention practices

HELENA – Montana Attorney General Steve Bullock today announced a settlement with the Internet-based phone company VONAGE. Under the agreement, VONAGE will make significant changes to its marketing practices and provide refunds to eligible consumers.

VONAGE is one of the nation’s largest providers of a service known as “Voice Over Internet Protocol,” which allows customers to make and receive phone calls over the Internet rather than through the traditional public telephone network.

The Internet-based phone service paid incentives to customer service representatives for retaining or “saving” consumers who sought to cancel their service. As a result, VONAGE customers widely reported having difficulty or being absolutely unable to cancel their service. The settlement announced today puts strict limitations on this practice, and requires recording and verification of these telephone calls.

“Companies like VONAGE have deliberately turned the whole notion of “customer service” on its ear, so that consumers are even more frustrated and confused after they call the company than before,” Bullock said. “That’s not good enough, and this settlement will hold VONAGE to a higher standard – a standard of genuine customer satisfaction it should have been striving to meet without our intervention.”

The agreement also addresses a number of other marketing practices that have led to consumer confusion about the cost associated with VONAGE equipment and service. As part of the settlement, VONAGE will revise its disclosures regarding the offer of “free” services, money-back guarantees and trial periods.

Today’s settlement puts in place a broad restitution plan requiring VONAGE to make refunds to eligible consumers. Those eligible would have filed complaints about unauthorized charges after January 2004. Consumers who believe they have been subjected to unauthorized charges but have not yet filed a complaint, have until March 16, 2010 to do so.

On top of the restitution paid to consumers, Montana and 31 other states will also receive $3 million in the settlement.

Consumers who believe they may have an eligible complaint should contact the Montana Department of Justice, Office of Consumer Protection at (800) 481-6896 or (406) 444-4500.

Bullock is joined in announcing today’s settlement by the attorneys general of Alabama, Arizona, Arkansas, Connecticut, Florida, Hawaii, Idaho, Illinois, Indiana, Kansas, Kentucky , Louisiana, Maine, Michigan, Missouri, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oregon, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Vermont, Washington, West Virginia and Wisconsin.

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