Prodigy Services’ Fee Setup Under Probe
Prodigy Services Co., the operator of a popular electronic information service for home computer users, is under investigation by the consumer protection division of the Los Angeles County District Attorney’s Office, a county official said Monday.
The investigation is related to protests launched last fall after Prodigy surprised subscribers by announcing that it would alter its flat-rate service by imposing extra fees on frequent users of electronic mail, a service for sending written messages from one computer to another.
Prodigy also angered some subscribers by limiting the kinds of messages that could be transmitted over its electronic mail, or E-mail, system.
“We’ve gotten some complaints, and we’re looking into them,” said Richard de la Sota, the deputy district attorney handling the case. He quickly added, however, that “nothing may come” of the investigation.
Authorities are looking into the possibility of unfair business practices or deceptive advertising by White Plains, N.Y.-based Prodigy, which is jointly owned by International Business Machines and Sears, Roebuck & Co. It is one of the nation’s two biggest electronic information services for home computer users, with what is estimated at more than 500,000 households.
Protesters have maintained that Prodigy’s new E-mail fees broke an advertised promise to provide flat-rate service, and they accused the company of violating their freedom of speech by censoring messages.
In December, Prodigy settled a complaint by the Texas Attorney General’s Office that its ads may have misled subscribers. It paid the state $12,500 and offered refunds to 50,000 users. The company, accused by Texas authorities of falsely describing its E-mail service as free in its ads, said 68 people requested refunds under the settlement.
Prodigy, launched as a flat-rate service more than two years ago, in January began charging subscribers 25 cents for every electronic mail message they send beyond 30 a month. The first 30 messages have remained free, while the basic monthly charge for Prodigy was boosted to $12.95 from $9.95.
After angry subscribers protested the new charges with a flood of E-mail messages to retailers advertising on the Prodigy system, the company told subscribers to limit their electronic communications with advertisers to questions about their merchandise and service. The company also shut off Prodigy service to about a dozen protest organizers.
In addition, Prodigy has barred electronic messages that company officials consider obscene or that they believe harass subscribers or serve as commercial solicitations.
Prodigy officials have maintained they have the same rights as newspapers to edit or delete material they believe is unsuitable for publication. They also said the financially struggling service imposed the new E-mail charges for economic reasons after a fraction of subscribers turned out to be the dominant users.
According to Prodigy, 97% of the households using the service send no more than 30 E-mail messages a month. “There’s this tiny group that’s angry with us for changing our prices,” Prodigy spokesman Steve Hein said. “There’s no merit in what they’re saying.
“We provide a high level of satisfaction to a large number of people, and that’s what counts,” Hein added.
Hein said Prodigy had been unaware of the investigation and had not been contacted by the District Attorney’s Office. The probe was first disclosed in the trade publication Network World.
By using an easy-to-operate computer format, Prodigy has made an unprecedented effort to hook a broad cross-section of consumers on computerized shopping, stock trading, airline ticket buying and other electronic publishing services.
