July 11, 2007, 4:00 PM — AOL LLC will pay more than US$3 million to settle complaints that it charged customers for unauthorized services.
The settlement money will go to 48 states and the District of Columbia, which plan to use the money in various ways, typically for consumer education and to fund consumer-fraud investigations.
In addition to the $3 million, AOL agreed to offer refunds to consumers who complain to the company or through the offices of states' attorneys general. AOL must refund consumers who complain of unauthorized charges for services, the states say.
AOL also agreed to improve the way that customers can cancel their services. Previously, most customers could only cancel their service by calling AOL. But AOL customer service representatives received incentives for retaining customers. As a result, many customers complained that it was very difficult and in some cases impossible to cancel their service, according to the Arkansas attorney general's office.
In Illinois, customers who tried to cancel their services were often offered a free month of service as an incentive to stick with AOL, said that state's attorney general office. After the free month, customers would try again to cancel but customer care representatives would pressure them to stay. Some consumers said that they thought they'd cancelled their service only to continue receiving bills for the service.
To address the problem, AOL setup an Internet site that customers can use to cancel their service. In addition, when customers cancel, AOL must clearly disclose the amount of time remaining on the account and provide a confirmation number showing that the customer cancelled the service.
AOL made many of the changes during 2005 and 2006 on a voluntary basis nationwide, said AOL spokeswoman Amy Call. The settlement "puts to rest any remaining issues related to our old access business model," she said in a statement.
Many customers may have recently begun trying to cancel their service because AOL is in the midst of a business transition. It now offers free e-mail services and grants anyone access to its portal, in hopes of earning revenue from advertisements. AOL still offers dial-up Internet access and a tech support service for a fee.