Vonage settles investigation for $3 million

Nov 17, 2009

NEW YORK — Voice over IP phone service provider Vonage Holdings Corp. has agreed to pay $3 million to 32 states to settle an investigation into some of its business practices.

In a filing with the Securities Exchange Commission, Vonage said it also agreed to provide refunds to affected customers.

Idaho Attorney General Lawrence Wasden said his office received complaints from consumers who said they found it difficult to cancel their service with Vonage amid pressure from the company to keep their accounts.

In Texas, officials said that Vonage also failed to clearly tell potential customers that they needed high-speed Internet service to use Vonage, which offers cheaper calls by sending voice data over the Internet. Officials said those unable to use the service had to pay cancellation and other fees.

New Jersey.-based Vonage did not add 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.

Maine’s attorney general, Janet Mills, said Vonage will revise what it discloses regarding offers of “free” services, money-back guarantees and trial periods.

There are 31 states sharing in the $3+ million settlement to cover legal and other miscellaneous costs, and any refunds owed by Vonage are in addition to the amount of the claim.

The are a host of other states participating in the settlement, These states include Alabama, Arizona, Arkansas, Connecticut, Florida, Hawaii, Illinois, Indiana, Kansas, Kentucky, Louisiana, Michigan, Missouri, Montana, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oregon, Pennsylvania, South Carolina, South Dakota, Tennessee, Vermont, Washington, West Virginia and Wisconsin.

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