November 16, 2009

               LANSING - Attorney General Mike Cox today announced a multi-million dollar, 32 state settlement with Internet phone service giant Vonage, requiring the Delaware corporation to offer refunds to eligible Michigan customers, make significant changes to its marketing practices and honor consumer cancellation requests.

Filed this afternoon in Ingham County Circuit Court, the settlement addresses customer complaints about the difficulty or inability to cancel their Vonage service.  The company formerly paid incentives to customer service representatives for retaining or "saving" customers in lieu of cancellation when consumers called to terminate their service.  As a result, consumers reported that cancellation was extremely difficult and sometimes impossible.  The agreement puts strict limitations on this practice and requires recording and verification of these telephone calls.

The settlement also addresses additional marketing practices which have led to consumer confusion about the costs associated with Vonage equipment and service.  Specifically, Vonage will be forced to revise its disclosures regarding the offer of "free" services, money-back guarantees and trial periods.

 "Business practices like these are unfair to Michigan families," said Cox.  "When a business solicits new customers with advertisements offering a 'free trial period' or 'money back guarantee' they have an obligation to deliver."

Current and former Vonage customers across the state are eligible to receive refunds if they were billed after attempting to cancel their service, attempted but failed to qualify for the company's cash-back guarantee or signed up for a free trial without being told there was a minute limitation on their phone usage.

The broad restitution plan requires Vonage to make refunds to eligible consumers who filed unresolved complaints with the Attorney General regarding unauthorized charges beginning on January 1, 2004 and extending until March 16, 2010.

Attorney General Cox's office led the investigation along with Connecticut, Illinois, Oregon, Pennsylvania, Texas, and Wisconsin.   Other participants in the settlement include Alabama, Arizona, Arkansas, Florida, Hawaii, Idaho, Indiana, Kansas, Kentucky, Louisiana, Maine, Missouri, Montana, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, South Carolina, South Dakota, Tennessee, Vermont, Washington and West Virginia.  In addition to the customer refunds, Vonage has agreed to reimburse taxpayers in these states a combined $3 million.

Michigan consumers who wish to file a complaint may do so on-line at http://www.michigan.gov/ag or by writing to the Consumer Protection Division, P.O. Box 30213, Lansing, MI  48909.

Complete terms of the settlement agreement ("Assurance of Discontinuance") are available on the Attorney General's website;  http://www.michigan.gov/ag.

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