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AOL Agrees to Clean Up Cancellation Procedures

Company Bows to Demands of New York Attorney General

August 24, 2005
New York Attorney General Eliot Spitzer has reached agreement with America Online (AOL) that requires the internet service provider to reform its customer service procedures. Under the agreement, AOL will alter the incentives it offers to customer representatives who seek to persuade subscribers not to cancel their service.

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"This agreement helps ensure that AOL will strive to keep its customers through quality service, not stealth retention programs," Spitzer said.

Technically, the agreement applies only to consumers living in New York but it provides ammunition for the thousands of consumers in other states who have had similar problems.

For years, consumers have complained that they have been unsuccessful in canceling their AOL service despite numerous attempts.

"I have tried time and time again to cancel my AOL account. They continue to draft monies out of my account unauthorized," said Dona of Columbia, SC, in a recent complaint to ConsumerAffairs.com. They currently owe me $51.85 that was drafted from my checking account and have yet to give it back to me.

In response to approximately 300 consumer complaints, Spitzer’s office began an inquiry of AOL’s customer service policies. The investigation revealed that the company had an elaborate system for rewarding employees who purported to retain or "save" subscribers who had called to cancel their internet service.

In many instances, such retention was done against subscribers’ wishes, or without their consent.

"My father passed away and I called America Online to cancel my internet service with them, since I really only used it to talk to my dad there was no reason to continue it," Rhonda of Lynchburg, VA, said. Three months later, money was still being taken from her checking account.

Under the system, consumer service personnel received bonuses worth tens of thousands of dollars if they could successfully dissuade or "save" half of the people who called to cancel service.

For several years, AOL had instituted minimum retention or "save" percentages, which consumer representatives were expected to meet. These bonuses, and the minimum "save" rates accompanying them, had the effect of employees not honoring cancellations, or otherwise making cancellation unduly difficult for consumers.

Many consumers complained that AOL personnel ignored their demands to cancel service and stop billing.

The agreement requires AOL to:

• Eliminate any requirements that its customer service representatives maintain a minimum number of "saves" in order to earn a bonus;

• Record all service cancellation requests and verify action on the request through a third-party monitor;

• Provide refunds to all New York consumers who claim harm based on improper cancellation procedures, up to four months worth of service;

• Pay $1.25 million to the state in penalties and costs.

The claim form for New York consumers seeking refunds is available at Attorney General Spitzer’s web site www.oag.state.ny.us/internet/internet.html.

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