Juno, Gateway Settle Ad Dispute

WASHINGTON — Juno Online Services Inc. and Gateway Inc. agreed to settle Federal Trade Commission charges of deceptive advertising for “free” Internet service.

The two prominent firms didn’t admit any wrongdoing but agreed to change how they describe Internet-access services that are nominally free but include additional charges for heavy use or are difficult to cancel after a trial period, the FTC said. The firms also agreed to refund improper charges to subscribers.

“These so-called ‘free’ Internet access offers were anything but,” said FTC consumer-protection chief Jodie Bernstein.

Gary Baker, a Juno spokesman, said the firm has already addressed the problems found by the agency. “Our practices were comparable with the rest of the industry at that time. Now they are at a standard above what is being followed by the rest of the industry,” he said. A Gateway spokesman couldn’t immediately be reached for a comment.

The FTC singled out Juno (JWEB) for making it hard for consumers to cancel a free trial. The telephone number for cancellations was kept unpublished, the agency said. Consumers who did manage to reach the line were kept on hold for so long that many gave up.

In another alleged abuse, Juno promised consumers 150 hours for a free trial but didn’t tell them the trial only lasted one month. In many cases, the FTC said, software for the service didn’t arrive until the trial period was half over. In addition, Juno didn’t inform consumers that they might incur long-distance charges, the agency said.

The FTC said Gateway (GTW), one of the country’s largest personal-computer makers, didn’t adequately tell consumers that its “free” Gateway.net Internet service included long-distance fees of $3.95 an hour for rural users and $1.50 for local access over 150 hours per month. The fees were disclosed only in fine print, the FTC said.

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