Ag's Investigation Leads To Changes In Cellular Phone Marketing Practices
Attorney General Spitzer today announced a settlement with Bell Atlantic Mobile concerning the company's marketing and advertising of its cellular telephone service.
The Attorney General's investigation centered around the marketing of the company's "Talk Along" plan, which it offered from late 1995 through early 1997 and committed consumers to two-year contracts with the company.
"We are pleased that Bell Atlantic Mobile voluntarily discontinued these practices," said Spitzer. "By obtaining this agreement, we want to ensure that illegal marketing techniques are not used in the future."
Under New York law, agreements for longer than one year must be in writing. The Attorney General alleged that the company was violating state law because it did not obtain consumers' written authorization.
"My office will continue to monitor the advertising and marketing practices in this highly competitive, developing industry," said Spitzer. "Consumers deserve to know all the terms of a promotion so they can make a fully informed decision when they select a cellular phone company."
Consumers who called to subscribe to Bell Atlantic Mobile's "Talk Along" cellular service plan were sent a package containing a cellular phone and several written documents, including a cellular service contract detailing the terms and conditions of a proposed two-year service agreement.
The telephone was sealed separately from the instructional materials. On the inner package was a message advising consumers to read the enclosed documents before breaking the phone's seal. The materials explained that by "breaking the seal", the consumer would be indicating acceptance of the terms and conditions of the service agreement.
"Even though consumers were warned about the consequences of opening the seal to get to the phone; state law required the company to obtain their authorization in writing," said Spitzer.
During the course of the Attorney General's investigation, Bell Atlantic Mobile discontinued this practice as well as another one under which the company automatically renewed subscription agreements of consumers who failed to respond to renewal statements sent to them by regular mail. New York law requires that such notices be served personally or by certified mail.
Under the terms of the agreement, the company also agrees to clearly and conspicuously disclose any material conditions of offers in all future advertisements.
For example, although the company's "TalkAlong" program was advertised at $14.99 a month and free on weekends, the rate was only available to consumers who agreed to be bound to a two-year service agreement.
In addition, subscribers who used their "free" air time incurred land line charges. Bell Atlantic Mobile failed to clearly and conspicuously disclose these significant points in some of its advertisements for the "Talk Along" plan.
As part of the agreement, Bell Atlantic Mobile will pay $65,000 to the State for the cost of the investigation. The company admitted no wrongdoing.
The case was handled by Assistant Attorneys General Melissa Saren and Shari Rubin Brooks in Spitzer's Consumer Frauds Bureau.