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FTC opposes Ameritech class action settlement.(Brief Article)
Michael Erikson has filed a class action suit alleging that Ameritech breached contracts with its voice mail subscribers by charging them more for the service than promised. Ameritech has denied all allegations of liability and wrongdoing, contending that the usage charges were fully disclosed.
Nevertheless, a proposed settlement in Erikson v. Ameritech Corp. is pending in an Illinois state court, and the Federal Trade Commission seeks to file an amicus brief objecting to it. The FTC contends that the court should not approve the settlement because both the proposed conduct relief and compensation for injured class members are inadequate.
The proposed settlement would require Ameritech to: (1) provide one free month of Ameritech's Speed-Dial 30 service to all certified class members who call in and request this product; (2) pay class counsel fees of up to $971,000; (3) make disclosures about local phone charges on its Web site and in its welcome letter for new subscribers; and (4)send a one-time notice to customer service representatives reminding them to disclose local phone charges to prospective customers who inquire about voice mail services.
The court scheduled a June 27 hearing on the FTC's motion and a hearing on the settlement itself on July 25.
The FTC coordinated with five states --Illinois, Indiana, Michigan, Ohio, and Wisconsin --that have also filed a joint petition to intervene amd object
The FTC thinks that the settlement is inadequate because it would not require Ameritech to disclose possible extra per-call or per-minute based charges before prospective customers agree to sign on. Rather, Ameritech would only be required to make such disclosures on its Web site and after consumers have agreed to buy the service.
Second, the agency says that the proposed compensation for injured class members --one free month of Speed-Dial 30 service -- is of little or no value and "therefore would not fairly, reasonably, or adequately compensate class members who paid additional charges for local calls as a result of Ameritech's alleged conduct."
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