Wednesday, July 11, 2007

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Texas Attorney General Greg Abbott, AOL Reach Agreement to Improve Cancellation Requests, Provide Refunds

AUSTIN – Texas Attorney General Greg Abbott today reached a multi-state agreement requiring AOL, one of the nation’s largest Internet service providers, to issue customer refunds and reform its handling of consumer cancellation requests.

Under the agreement, which was filed by Texas and 48 other states, AOL must provide its customers a simple online cancellation method (http://cancel.aol.com). The attorneys general took legal action after AOL customers complained about difficulty and confusion when they attempted to cancel their AOL paid services. In the future, AOL must record and verify telephone calls between AOL customer service representatives and customers calling to cancel their accounts. AOL must also resolve outstanding customer complaints and provide refunds to consumers who complained since Jan. 2005 of unauthorized service charges or improper billing.

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Attorney General's agreement with AOL

Texans deserve straight answers and clear information from their Internet service providers,” Attorney General Abbott said. “Today’s agreement ensures that millions of AOL customers in Texas and across the country are adequately informed about their online services. With more Texans using the Internet every day, we will continue working to enhance online disclosures and protect Internet purchases.”

Prior to today’s agreement, AOL limited the methods available for consumers to cancel their accounts. As a result, the majority of consumers attempted to cancel by directly calling AOL. Customer service representatives received incentives for retaining or “saving” customers in lieu of cancellation, and subscribers complained that cancellation was extremely difficult, if not impossible. Today’s agreement puts strict limitations on this practice and mandates the availability of online cancellations.

The settlement also requires AOL to revise its terminated account reactivation disclosures as well as disclosures involving accounts that are invoiced directly to monthly telephone bills. AOL must also reform its practice of allowing consumers to create “spin off” accounts, which are additional, paid AOL accounts stemming from one original membership. Under the terms of the agreement, these “spin-off” accounts can now only be created over the phone in a recorded conversation with a customer service agent, who must make detailed pricing disclosures.

AOL recently announced that it would begin limiting its role as an Internet access provider, but would allow its customers to convert to free e-mail accounts. The terms of today’s agreement should minimize the potential for consumer confusion during this transition, by requiring additional disclosures and confirmation of calls where customers are transitioned to Internet service offered by third parties.

The Texas Attorney General’s Office has participated in three other multi-state actions against AOL. In 1996, Texas and 19 other states entered into an agreement with AOL regarding the company’s standard services pricing. In 1997, AOL entered into an agreement with Texas and 42 other states that reformed the company’s customer notification procedures about various services, including dial-up accessibility. In 1998, Texas and 43 other states reached an agreement with AOL regarding the company’s disclosures for free-trial offers, premium services, and communication and long-distance charges, as well as advertising to minors and changes to service agreements.

Today’s settlement also requires AOL to reimburse the states $3 million.

The other participants in today’s settlement are the states of Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Louisiana, Maine, Maryland, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Vermont, Washington, West Virginia Wisconsin, and Wyoming, the Commonwealths of Kentucky, Massachusetts, Pennsylvania and Virginia, and the District of Columbia.

Consumers may file a complaint with the Texas Attorney General’s Consumer Protection Division at (800) 252-8011 or online at www.texasattorneygeneral.gov.