Iomega Corp. has agreed to set up a toll-free, 24-hour, automated customer-support system for customers via the Internet or by telephone as part of a proposed set-tle-ment in a class-action consumer-fraud lawsuit.

If the settlement is approved April 3 by a Delaware Chancery Court, it will end a July 1997 lawsuit alleging the Roy-based maker of Zip, Jaz and Ditto data-storage products breached product warranties and failed to provide customers adequate technical support.The lawsuit applies to an estimated 5 million consumers who bought Iomega products from July 16, 1994, to Sept. 1, 1997. Customers said they had trouble installing Iomega products despite packaging claims that installation was easy. When they tried to call Iomega for what they believed would be free technical support, they learned the company charged up to $19.99 for the help.

Even then, they had trouble getting help because technical-support lines were severely under-staffed, according to the lawsuit. Customers often were left waiting on hold for an hour or more.

The proposed settlement is part of Iomega's ongoing effort to improve customer service, said James Prendergast, a Boston attorney representing the company. "We think it's good and fair, and we look forward to its approval."

Lawrence Feldman, an Elkins Park, Pa., attorney for the plaintiffs, agreed.

"It advances the cause of consumers by forcing Iomega to do what it promised," he said.

The automated "Virtual Consultant" Iomega will set up on the Internet will provide illustrated answers to customers' most frequently asked questions. At least 250 customers will be able to use it at once. The automated telephone system will respond to frequently asked questions with prerecorded voice messages.

In addition, Iomega said it will create a toll-free customer-support telephone line that gives customers the option of asking nontechnical questions person-to-person. Staffers may refer problems to technical-support personnel, who will charge for their services.

However, for two years from the date of the settlement, Iomega will waive technical-support fees for customers whose questions are not answered by the automated systems.

Feldman said many customers covered by the lawsuit are pleased with the terms of the proposed settlement.

The only objections so far have been raised by a small group of consumers who object to the $700,000 fee attorneys for the plaintiffs will receive as part of the agreement. They want the court to lower the fee before approving the settlement.