Multi-State Task Force Begins Probe of ISPs’ Disclosure

A multi-state task force of attorneys general has launched a preliminary investigation into the customer disclosure practices of numerous Internet service providers, according to one of the lead investigators.

“We’re looking at a number of companies within the industry to see what terms of services” they offer and whether those terms are clearly stated at sign-up, said Jack Norris, chief of multi-state litigation in the Florida state attorney general’s office. “We just want to look at their disclosure policies.”

States are examining whether the service companies, which provide Internet connections and member services for homes and businesses, adequately disclose the terms of service users agree to when they sign up, Norris said. The states want to make sure Internet service providers meet their disclosure guidelines for things like free trial offers, potential telephone toll charges, removal of unauthorized charges and advertising, he said.

California is participating in the probe, according to a spokeswoman for state Atty. Gen. Bill Lockyer. She declined to provide further details.

Since most ISPs operate across state lines, any finding that a service provider was not in compliance could affect consumers in nearly all states.

Norris stressed that the attorneys general haven’t necessarily found wrongdoing by the companies, which include several well-known names among ISPs, he said.

But the task force wants to make certain the companies are living up to the spirit of an agreement reached with America Online Inc. in January 1997. The same multi-state task force had threatened to sue AOL following customer complaints about its marketing, billing and disclosure practices; a settlement was later reached.

Under that settlement, AOL agreed, among other things, to:

* Clearly and conspicuously disclose terms of its free trial offer.

* Inform users of potential charges for telephone access numbers and charges for its premium services.

* Present information in ads targeting minors in language they can understand.

* Bill members only for services for which they are liable and employ “reasonable procedures” for processing cancellations.

* Not hold members liable for unauthorized charges.

* Provide clear and conspicuous notice of changes to member agreements, including prices, with at least 30 days’ notice.

As part of the settlement, AOL agreed to pay $2.6 million to cover costs of the investigation.