Please note: This article is published as an archive copy from Philadelphia City Paper. My City Paper is not affiliated with Philadelphia City Paper. Philadelphia City Paper was an alternative weekly newspaper in Philadelphia, Pennsylvania. The last edition was published on October 8, 2015.
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Also this issue: Universal Concerns fineprint Gale Warning Wheel in the Sky Swing (Vote) Dancing The Bell Curve |
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July 24-30, 2003
city beat
GoInternet Back To Arkansas
There’s trouble brewing in the land of Clinton for Old City’s lightning rod of a telemarketing firm. Oh yeah, there may be some problems with North Carolina officials and the feds as well.
In the two years since City Paper first broke the GoInternet story, state and federal law-enforcement agencies from across the country have been leaning hard on the company and its owner and founder, Neal Saferstein, alleging numerous violations of consumer-protection laws.
The Old City-based GoInternet uses a small army of telemarketers to sell web pages and Internet services, targeting nonprofit organizations and small- and medium-sized companies all over the country. They continue to do so today even though the telemarketing firm has, for some time, been under fire from several attorneys general, the Federal Trade Commission and its local neighbors, all of whom seem to be vying for a pound of Saferstein's flesh.
In March 2001, barely a month after that first story, the FTC -- which had already slapped GoInternet with liens in the thousands of dollars for various violations -- was granted a Stipulated Judgment and Order for Permanent Injunction. The order was meant as a warning to GoInternet executives: Cease business practices that the FTC considered "fraudulent and deceptive" or else. Concerned that those practices haven't ceased at all, the FTC is currently going after Saferstein and company for violating the order. If the FTC prevails, GoInternet would be forced into compliance by whatever means the court feels is necessary. They'd also be forced to pay restitution to anyone who can prove they were billed by the company in violation of the order.
"There's an open contempt investigation concerning GoInternet," says Larissa Bungo, attorney for the FTC's East Central Region, based in Cleveland, Ohio. "This is not just a compliance review. The order allows us to not only monitor the company for compliance with the order, but to vigorously investigate if we think they're still engaged in the same practices, which is what we're doing. I can't say any more than that at this time."
In a letter to GoInternet attorneys dated Oct. 17, 2002, Bungo calls on the company to produce complete employee lists going back to March 2001 along with a comprehensive list of every complaint made against the company by consumers. Asked how many consumers that might be, Bungo will only say "lots."
As much as the FTC seems to want to get its hands on Saferstein, it may have to wait in line.
Arkansas Attorney General Mike Beebe claims to have first dibs and, after numerous continuances, the State of Arkansas vs. GoInternet is scheduled to go to court in Little Rock on Nov. 10.
North Carolina Attorney General Roy Cooper is also waiting since his office has an ongoing investigation and pending legal action against the company for the same reasons as Beebe.
According to the complaint and answer provided by the Arkansas Attorney General's Office this week, GoInternet telemarketers don't disclose terms of sale during the sales call. In other words, they leave out little details like price, method of billing or method of cancellation, routinely failing to tell potential customers that unless he or she affirmatively cancels the sale within 15 days, a $29.95 charge will appear on their phone bill each month.
The attorney general asked, and was provided, a list of GoInternet's customers in Arkansas who were happy with the service, but those references didn't exactly pan out for Saferstein. The Arkansas businesses that GoInternet provided as satisfied customers were called but not one had agreed to hire GoInternet for Internet services, according to the attorney general's complaint. Further, most were unaware that they were being billed even though some had been on GoInternet's rolls since December 1998.
"Subsequently, a complete survey of over a thousand business targets in Arkansas listed as current customers by the defendants failed to produce even a single legitimate customer," reads the complaint.
Should the court rule in favor of Arkansas, GoInternet would be barred from doing business there. The company would also have to pay full restitution to anyone in the state who's ever been billed by the company.
And if that's not enough, here's the kicker: Beebe's asking for a $10,000 fine to be imposed on GoInternet for each violation. That means ten grand for each GoInternet customer for every month they were billed, a number that could conceivably run to millions of dollars.
Camille Williams, an attorney in the Arkansas Attorney General's Office, confirms the contents of the complaint -- and Saferstein's subsequent denial of the charges -- but wouldn't elaborate. ("I can't comment for the record, since this is obviously an ongoing investigation," Williams says.)
Not surprisingly, several calls to Saferstein's office for comment on this story went unanswered. In their official legal response, Saferstein's Arkansas lawyers, the Rose Law Firm of Hillary Clinton and Whitewater fame, categorically denied the charges and asked that the state's claim be dismissed immediately. But, with the trial still scheduled to start in November, it appears those pleas went unheard.
Back here in Pennsylvania, GoInternet's home, a spokesperson for the State Attorney General's Office wouldn't comment on whether there's a current investigation into the company's business practices but the state Department of Public Welfare admits that it had a business relationship with the company.
"We do have dealings with GoInternet. They're an approved training vendor through the Welfare-to-Work program," says DPW spokesperson Stacey Ward. Ward says the Philadelphia Workforce Development Corporation (PWDC) administers the program locally. The way it works is this: A company like GoInternet hires and trains former welfare recipients and PWDC pays half the employee's salary for the first three months.
PWDC Communications Director Yvette Nunez-West said Ward was correct in saying that GoInternet was an approved training vendor, but says the DPW spokesperson should have used past tense.
"Our contract with them ended more than two years ago, in September 2001," Nunez-West says. "It was a wage-subsidy contract, and yes, we paid half the salaries for three months of the people they hired off welfare during that period." Nunez-West doesn't know how many employees GoInternet hired under the program, but says there's no intent to renew the contract.
So, in less than six years since he founded the company, Neal Saferstein has managed to draw the ire of his Old City neighbors and law-enforcement authorities in spades. Whether he's a misunderstood businessman trying to live the American dream while providing employment for hundreds of formerly disenfranchised workers, or a sleazy charlatan bilking unsuspecting suckers to the tune of hundreds of thousands of dollars a year will be played out later this year in an Arkansas courtroom.
That is, unless the feds or the folks in North Carolina get there first.
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