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Juno settles terms-of-service dispute

The United Online subsidiary agrees to notify subscribers when making changes to its service agreement, settling an investigation from the New York State Attorney General's office.

The New York State Attorney General's office said Tuesday that it has reached a settlement with Juno Online Services, requiring the company to give people "clear, conspicuous and advance" notice of changes to its service agreement.

Under the settlement, Internet service provider Juno, which merged last year with rival NetZero to create United Online, agreed to give subscribers notice of any material changes to the service agreement at least 30 days before the effective date.

Juno must provide a description of the changes, the effective date, and a comparison to the original agreement via e-mail, a "pop-up" screen, postal mail or a conspicuous posting on its Web site. In addition, Juno will pay $30,000 to cover the costs of the attorney general's investigation.

The settlement sprung out of Juno's attempt last year to switch the terms of its service agreement to push a "Virtual Supercomputer Project," a controversial but short-lived experiment aimed at using the untapped processing cycles in its customers' computers. The project was intended to be a model for distributed computing, in which computing jobs are farmed out in small chunks across the Internet, turning a network of PCs into a kind of supercomputer.

State Attorney General Eliot Spitzer's office said Juno's disclosure of the change failed to give sufficient notice to its subscribers. The amendments included authorizing Juno to download software, which would perform computational tasks unrelated to Internet connection, and to replace the screensaver. The terms also stated that Juno could require subscribers to leave their computers on constantly and make customers liable for costs, maintenance or technical issues resulting from continuous operation of the computer, according to the attorney general's office.

"This attempt to modify a service agreement was particularly disturbing because of the significant burdens the company attempted to place on the consumer," Spitzer said in a statement. "It is neither appropriate nor legally permissible for a company to attempt to impose such fundamental changes without letting customers know in advance. Consumers need and the law requires adequate and effective notice."

The settlement is considered to be the first in which an Internet service provider has agreed to modify the way it discloses changes to its service agreement.

"The supercomputing project was never implemented," a United Online representative said. "It was a project that Juno had in development even before the company merged with NetZero. After the United Online merger was closed, the company chose not to continue that project."

United Online still uses the NetZero and Juno names to run free and paid Net access services.