April 22, 2008
Fulton, Mo. - Attorney General Jay Nixon is going to court to prevent a Mesa, Ariz., company that used deceiving activation checks while marketing its dial-up Internet access services from continuing to bill small businesses, churches and other organizations in Missouri. Nixon obtained a temporary restraining order Monday (April 21) in Callaway County Circuit Court against Simple.Net Inc. and its president and treasurer, DeVal Johnson, immediately ceasing all of the company's billing activities in Missouri. Nixon's lawsuit against the defendants was filed in Callaway County because several of the complaints the Attorney General's Office received were from there.
Nixon says Simple.Net is a national seller and provider of dial-up Internet access services that used activation checks as a means of marketing its services to Missourians from at least 2003 through 2005. The company mailed thousands of the checks for small amounts such as $3.25 to small businesses, churches, and other organizations that "activated" the recipient's Simple.Net account once the check was deposited.
Nixon alleges that the defendants did not adequately disclose that deposit of the check by the recipient would automatically trigger the opening of a Simple.Net account and the collection of monthly payments ranging from $16.95 to $19.95 from the recipient. Only on the back of the check was there a statement in small print that indicated that by depositing the check, the prospective customer agreed to pay on-going monthly fees which would be collected through the customer's local telephone bill or by debiting their bank account.
"Hundreds of Missouri businesses, churches and other organizations deposited these checks, and most were completely unaware that by doing so they had ‘accepted' the defendants' offer of dial-up Internet services and the ongoing payment obligation," Nixon said. "This is a misleading and deceitful marketing strategy by this company, and those that were duped by this approach should not have to keep paying for a service they don't want, need or never received."
Though the company claims it stopped using activation checks in 2005, Nixon says many Missouri small businesses, churches and other organizations continue to be billed. Many of the businesses that were victimized by the defendants' marketing practices already had Internet access service through another provider, or did not use the Internet at all. The company's unorthodox billing practices of using the customer's telephone bills or by debiting their bank accounts made it possible for such hidden billing to go unnoticed for months or years, Nixon added.
Those consumers who contacted Simple.Net to cancel the service and to receive a full refund were seldom offered refunds for more than a couple months because of what the company considered a binding contract that existed due to the deposit of activation check.
Nixon will request that the court issue a preliminary injunction to end all of the defendants' billing activities in Missouri at a hearing May 19. The Attorney General's lawsuit also is requesting restitution, appropriate civil penalties and court costs.