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Looking for escape clauses

You may have scored a bargain with your free PC. But there may not be much you can do to break the ISP contract it came with if busy signals plague the service.

You've signed up for three years of Internet service in return for getting a personal computer for next to nothing. You're feeling pretty good right now, thinking that you got a real bargain.

But what happens in three months if busy signals keep you from logging on? Or if dropped connections drive you to bang your brand-new keyboard against the wall?

Should your shopper's dream become a nightmare, there may not be much you can do, short of dropping the ISP and sending the company a check for the value of the PC.

The biggest companies allow their customers to leave their ISP contracts, as long as they pay a penalty. Other upstart PC makers, however, could keep charging credit cards through the length of a contract, even if customers find their Internet service to be slow or inaccessible.

PC free for all The issue has yet to hit radar screens of large consumer advocacy groups or agencies such as the Better Business Bureau. But it is not a rhetorical question--many "free PC" companies operate on thin margins or are even losing money. As a result, customer service may not be a priority.

The most visible of the free PC offers are those provided by the large retailers such as CompUSA and Best Buy or manufacturers such as IBM and Sony in conjunction with large ISPs like CompuServe and Prodigy. In the latter case, the ISPs agree to provide a $400 rebate if the customer signs up for three years of Internet service at $19.95 per month.

It is possible to leave these contracts, but for a price.

The ISPs have set schedules of penalties for customers who decide to leave. CompuServe, for example, charges a customer $400 for leaving in the first year of service, $300 in the second, and $200 in the last year of the contract.

Some of the smaller companies that provide their own Net access impose similar penalties.

Gobi, which offers a PC in return for agreeing to subscribe to three years of Net service at $25.95 a month, charges $699 for cancellation during the first year of service. The penalty drops to $499 in the second year and $249 during the third.

But not all companies are this explicit. Some, such as DirectWeb, have the option of charging a customer's credit card through the three-year period regardless of whether the customer is using the ISP.

Here lies the biggest potential for dispute.

One of the most expensive aspects of running a quality ISP, along with the actual costs of Net connections, is providing solid customer support, those in the industry say. The small companies that are trying to make a profit by offering both PC and ISP deals often underestimate the difficulty of providing customer support to new Internet users, analysts say. Already several of these companies have drawn complaints from consumers who say they do not follow through with support.

In these cases, a customer has several places to turn. Some companies may be willing to go beyond the terms of their service contract and provide rebates or a way out of a three-year agreement. Consumer organizations such as the Better Business Bureau can act as an intermediary between a consumer and the PC company.

But the bureau warns that customers should pay close attention to their service agreements. The agency can step in only if the ISP and the customer agree that it should be involved.

Credit card companies or their affiliate banks can also help, to some extent. Credit card issuers often offer some grievance process that allows customers a venue for protesting charges they think are unfair.

But in the case of ISPs, any service problems would have to be egregious to qualify for this process, Visa International spokeswoman Casey Watson said. "If you sign a contract for that service, you have to have a credible reason for getting out of the service," Watson said.

Contracts can be broken if one party has good reason, legal experts say.

The service provided should have a value at least equivalent to what the consumer is paying, said Mike Audley, an attorney with Audley & Audley in Berkeley, California. But establishing the good ISP service vs. poor service, and at various price points, is legally ambiguous.

A customer's case would be stronger if an ISP guaranteed its performance, Audley says, but that's something many are unlikely to do. In other words, if an ISP promises that 99 percent of calls will be connected, but reality is closer to 80 percent, then the consumer would have an easy out by claiming the ISP failed to deliver on the terms of the contract.

Without that promise, however, an ISP might only have to show that you could connect just once to prove that it fulfilled its end of the bargain.

Some states do have consumer protection laws, under which an ISP might have to provide connection speeds or open connections equivalent to the industry average, Audley added. But this is still an undeveloped area of the law.  

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