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AOL's Problems Worsen as Consumer Complaints Mount

By Joe Benton
ConsumerAffairs.com

July 3, 2006

AOL/America Online • AOL Pays $3 Million, Promises to Clean Up Cancellation Process • AOL Settles Florida Fraud Charges • AntiSpyware Group Targets AOL Release As Dangerous • AOL Heads Roll Over Data Leak • AOL Now Free ... Sort Of • AOL Takes More Hits In Press, On Internet • AOL's Problems Worsen as Consumer Complaints Mount • AOL Embarrassed by CNBC Report On Its Business Practices • E-Mail Taxation Without Representation • AOL, Yahoo Planning Postage Charges for Email • AOL Settles With NY, Agrees to Clean Up Cancellation Process • Ohio Settles Lawsuit With AOL • AOL Abandons Broadband • Ohio Latest to Sue AOL • AOL Loses 2 Million Clients, Faces Subpoenas • Class Action Accuses AOL of Double-Billing Scheme • AOL Offers to Settle Federal Charges --- Consumer Complaints • Cancellation Difficulties • Double-billing • "Free" Hours • Unauthorized Charges • Shop-Direct Complaints • Tech Support

Not too long ago, AOL was at the top of the Internet heap with tens of millions of customers, more advertisers than it could handle and big companies lusting to acquire it. Consumers had gripes but were largely ignored.

Today, the tables have turned. AOL lost an estimated 800,000 customers in the last quarter alone and is thought to be signing next to no customers for its struggling broadband service.

As dial-up users convert to broadband, cable companies are grabbing many of them snd telephone companies offering low-priced DSL connections are getting the rest.

AOL's response isn't doing much to improve its image. Rather than find ways to make customers want to stay on board, AOL simply makes it difficult bordering on impossible for customers to quit.

The company was embarrassed last month when a consumer tape-recorded his efforts to cancel his AOL account and later supplied the tape to CNBC. It issued profuse apologies but whether it made any changes in its procedures is another matter.

The New York Times reported that an internal memo reminded AOL's customer service reps, whose actual title is "retention consultant," to try at least twice to get customers not to cancel -- and that was after the CNBC report.

Consumers also complain bitterly of alleged double-billing practices and a dubious "free trial" offer.

Just listen to John of Phoenix: "AOL continued to bill me, even using a cancelled debit card and then a debit card I had not given them after I cancelled the service." "I suspect they got the second card from my Time subscription. The bank credited me for the disputed charges."

"Now AOL is threatening to send me to a credit collection agency over $47. They refuse to answer my questions over the unauthorized debit card charges and when my wife called them the person was loud and abusive and then hung up."

John joins a growing number of people complaining to ConsumerAffairs.com about AOL's business practices.

Kimberly of Porter, Indiana, tells us that AOL continues to double-bill her.

"One of my accounts has been cancelled, yet another screen name with the company is being automatically debited from my checking account every month," she wrote. "I have persistently tried to call AOL, but to no avail. I am put on hold for what seems like an eternity and nobody from AOL ever answers me."

According to many complaints, AOL could be giving thousands of consumers who signed up for the "free trial" the silent treatment.

Still others trying to rid themselves of AOL are routinely threatened by an employee of the ISP warning the company will turn their account over to a collection agency if prompt payment by credit card is not forthcoming.

"They wanted the money immediately and would turn the matter over to a credit bureau if I did not agree. After arguing with her for 45 minutes, I finally gave up and said okay," John wrote from Bates City, Missouri.

"I will pay the $23.90 so I don't have to deal with you folks again. Well, I should not have done that. I gave her my credit card number and expiration date. I have still received daily phone calls from the robotic voice" at AOL, John said.

Shareholders Restless

The growing customer relations nightmare involving AOL comes as the company is under scrutiny for overstating earnings six years ago when then-Chairman Steve Case orchestrated AOL's takeover of Time Warner, Inc.

Five California pension funds, including the California Public Employees' Retirement Fund and California State Teachers Retirement System, are suing AOL Time Warner, Case and others alleging losses of $1 billion due to AOL's financial misrepresentations.

The lawsuit contends that Case and other AOL executives knew the company's Business Affairs Unit was making deals with vendors that required them to buy advertising with AOL, sometimes using AOL's own money.

The company faces at least 39 shareholder lawsuits over the nearly $200 billion in shareholder value it lost since it purchased Time Warner in 2002.

It has put $2.4 billion into a class action settlement fund and has paid out $358 million from a $600 million fund for shareholders who opted out of the major shareholder suits in California, New York and Ohio, according to company filings.

A spokesman for AOL had no comment on the lawsuit or the company's customer relations practices.

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