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Attorney General Ellen F. Rosenblum

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AG SUES SIMPLE.NET, INC. FOR USE OF ACTIVATION CHECKS

July 7, 2008

Attorney General Hardy Myers Sues Arizona Internet Provider For Using Unscrupulous Methods In Its Marketing Use Of Activation Checks

Simple.net Inc. to appear at July 25 hearing in Lincoln County Circuit Court to argue why the company should not be shut down in Oregon.

Attorney General Hardy Myers today filed a civil racketeering lawsuit against an Arizona internet service provider for allegedly attempting to dupe thousands of Oregon businesses and non-profit organizations into depositing negotiable checks that the company claimed were actual contracts for internet services. Named in the lawsuit filed in Lincoln County Circuit Court is Simple.net, Inc. of Mesa, Arizona, formerly Dial-Up Services, Inc. doing business as Simple.net.

In the lawsuit, the Oregon Department of Justice (DOJ) alleges that the defendant, from January 1, 2003 through November 2005, mailed over 195,000 solicitations into the state containing "activation" checks of under $3.35, which when cashed according to Simple.net created a contract to pay a monthly charge of $l6.95 or more for dial up internet access. The alleged victims deposited the checks thinking they were small refunds or payments on small debts, not a contract for services. DOJ contends that the company continued charging the recipient's local phone bill or through a draw on a checking account even after the marketing practices had stopped. Most customers never used the Internet service or even knew they had purchased it.

"This is the fifth major investigation that the Department has undertaken concerning the use of "activation" checks," Myers explained. "We will continue to be a leader in efforts to protect small businesses and non-profits from deceptive solicitations for services such as internet access and yellow page advertising."

The lawsuit asks for a civil penalty of $250,000, attorney fees and investigative costs and the forfeiture of all monies and property derived from or used in the alleged illegal conduct. The suit also requests restitution for all victims, who paid the defendant for unwanted and unused internet access billed.

In addition, the lawsuit seeks a permanent injunction prohibiting the company from using "activation" checks to solicit business in Oregon.

DOJ leads a group of 30 states that has investigated Simple.net, Inc. and its use of "activation" checks. The defendant filed a lawsuit in federal district court in Arizona against the states of Oregon, Missouri, North Dakota, and Idaho, alleging the states' investigation should be terminated because the company had entered into a court settlement with the Federal Trade Commission in 2001 about its use of "activation" checks. Simple.net's suit against the states was dismissed for lack of jurisdiction, but is on appeal. Of the group of 30 states, Idaho and North Dakota are litigating with Simple.net over its alleged failure to provide investigative discovery and Missouri has sued the company under its consumer protection law; that lawsuit is pending.

Oregonians with questions about this case and Oregon consumer protection in general may call the Attorney General's consumer hotline at (503) 378-4320 (Salem area only), (503) 229-5576 (Portland area only) or toll-free at 1-877-877-9392. DOJ is online at www.doj.state.or.us.

Contact:

Jan Margosian, (503) 947-4333 (media line only) jan.margosian@doj.state.or.us |
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