Ameritech Corp.’s Illinois customers who have purchased the company’s home wiring repair service would receive at least $20 apiece in free service and rebates under a $226 million court settlement the firm endorsed Wednesday.
The service, called “Linebacker,” costs $3 to $5 per month and is a form of insurance against phone trouble that originates within a customer’s home. This could include anything from an animal chewing through indoor wiring to a short-circuit or a phone cord pulled out of the wall jack.
Such things usually are easily fixed by the customer or a quick visit by an electrician, critics say, and spending $36 to $60 a year for a free service call in case of trouble is no bargain.
Ameritech takes care of line trouble outside the home at no charge to individual customers.
A lawsuit filed in circuit court in Downstate Madison County contended that Ameritech has signed some customers up for its Linebacker service without their knowledge as a profit-making strategy.
Similar complaints had been made in Ohio, Michigan and Indiana. A Wisconsin complaint along the same lines was settled by Ameritech about a decade ago.
The settlement, which is subject to approval by the court, would cover Ameritech customers who paid for the Linebacker service anytime since 1987. They will receive prepaid calling cards, credits for Ameritech services and rebates once the settlement is concluded.
Douglas Whitley, president of Ameritech Illinois, said it isn’t known just how much the settlement will average for each affected customer because the company hasn’t determined yet how many people would share in the $226 million.
“The important thing for people to understand is that they won’t have to do anything or apply for anything,” he said. “The company will contact them.”
Current Ameritech customers who are paying for Linebacker each month are the easiest to locate, Whitley said. It will be a bigger problem to locate people who took the Linebacker service in years past but are no longer Ameritech customers, he said.
“If someone took Linebacker in the 1980s and moved to California, that’s more of a problem for us,” he said. “Another complication is that some former customers may be dead now.”
Richard Notebaert, Ameritech chief executive, said his company “decided to settle in order to avoid costly and distracting litigation.”
Ameritech will take a $42 million charge in its fourth quarter as part of the settlement, reducing its quarterly profit by an estimated 8 cents per share.
Whitley declined to say how many Ameritech customers pay the monthly line protection charge, but he said that in the past year the company has answered an estimated 900,000 calls from people in its five-state region who were covered by the plan.
Those customers saved themselves the $200 charge Ameritech bills for making such house calls, Whitley said.
“We think this is a good service,” he said. “But the No. 1 thing is that we want to be straight with our customers. Two women alleged they were paying for Linebacker on their bills and didn’t know it. That became a class-action lawsuit.
“We delineate this charge on the bills every month. When you sign up for the service, you get a letter in the mail telling you that you have chosen this service. We are leaning over to ensure that our customers aren’t paying for anything they don’t know about.
“We decided it was best to settle this suit to give everyone confidence in our company (rather) than to leave confusion in any customer’s mind.”
Whitley said that eligible Ameritech customers probably will receive their settlements in four to six months.
