Sirius XM Radio, the dominant satellite radio provider in the U.S., is a Defendant in a class action lawsuit filed on behalf of all subscribers who paid fees or sales taxes for internet radio access and all consumers who purchased the “Family Plan” when it offered five (5) months free. This class action alleges that Sirius XM Radio has violated the federal Internet Tax Freedom Act 47 U.S.C. § 151.
The Internet Tax Freedom Act was signed into law on October 21, 1998 by President Bill Clinton and was extended in 2007 by President George W. Bush. This Act prevents federal, state, and local governments from the taxation of internet access. The purpose of the act is to allow open access to information as provided by internet service providers. Items or goods purchased through the internet are not included by the Act and state and local sales taxes may apply. Currently, the Internet Tax Freedom Act will remain law until November 2014.
Unfortunately, most consumers are unaware of this Act and are susceptible to being taken advantage of by internet service providers. Plaintiff Joel Broida has alleged that he was charged for internet connection and access to Sirius XM’s internet radio and state and local taxes for internet access. This led to Mr. Broida’s class action lawsuit on behalf of all consumers who have similarly been charged by Sirius XM Radio in violation of the Internet Tax Freedom Act. Mr. Broida also alleges violations of California’s consumer protection laws, breach of contract, and false advertising.
Last year, AT&T Mobility reached an agreement to settle similar claims with a class action lawsuit filed against it. AT&T was accused of violating the Internet Tax Freedom Act through its regular charging of taxes for internet access while using certain services on several popular devices owned by consumers nationwide. For example, AT&T was accused of charging unlawful fees for iPhone data plans, Blackberry data plans, laptop connect cards, pay-per-use data services and other smart phone plans. Simply using the internet, ability to use email, and access to one’s email contacts or calendar could lead to unlawful fees.
The settlement with AT&T provided consumers with three forms of relief. AT&T will no longer charge taxes for internet access unless required by state law. Also, AT&T is refunding consumers for taxes charged on internet access. Finally, AT&T is refunding any vendor’s compensation they received in those jurisdictions where compensation was awarded to AT&T.
Lawyers in our firm are continuing to investigate claims of violations of the Internet Tax Freedom Act. Consumers should be careful to check their bills and ensure they are not being unfairly taxed for internet access. We expect companies will learn that consumers will stand up for their right to be charged correctly and according to the law. For more information on the Internet Tax Freedom Act, you may contact Andrew Brashier, a lawyer in our Consumer Fraud Section, at 800-898-2034 or Andrew.Brashier@beasleyallen.com.
Sources: Sirius XM Radio Class Action Complaint, AT&T Class Action Settlement, Internet Tax Freedom Act
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