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Billing Disputes And Internet Service Providers

This week's question-Can an Internet Service Provider (ISP) cut off a customer's service for non-payment when there is a billing dispute?

One case involving AT&T suggests that an equitable balancing of interests could limit an ISP's right to cut off a customer's service.

In that case, American Cash Card arguably owed millions of dollars to AT&T. When AT&T threatened to cut off service, American Cash Card obtained an injunction prohibiting that cut off. The factors that weighed in favor of American Cash Card were:

It was a legitimate billing dispute; and

The court called the service provided by AT&T the "lifeblood" of American Cash Card's business.

Would this legal precedent apply to an ISP? After all, Internet access is different from long distance telephone service.

I think that this precedent likely would apply to an ISP. In an increasingly Internet dependent world, distinguishing between the importance of a company's e-mail and its long distance telephone service is difficult.

The moral of the story-If you're an ISP, you need a strongly worded provision permitting you to cut off service for nonpayment. From a customer relation's point of view, you might not want your standard form contract to be too overbearing. Nonetheless, it's a different equation if you have large customers with individually negotiated agreements. Then, you might want your agreement to be brutally clear about your right to cut off service for non-payment.

If you're the customer and you're contemplating withholding payment over a service or billing dispute, carefully document the legitimacy of your claim. If you look like a mere deadbeat instead of someone with a legitimate dispute, a court will not protect you like American Cash Card was protected.



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