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AOL Pays $3 Million, Promises to Clean Up Cancellation Process

Agreement Also Clears Up "Spin-Off" Account Confusion

By Truman Lewis
ConsumerAffairs.com

July 11, 2007 

As it has done so many times before, AOL promised to make it easier for customers to cancel.

In the agreement with 48 states and the District of Columbia, AOL promised to make a number of improvements including: easier cancellation procedures, improved billing disclosures and commitment to refunding unauthorized charges.

Consumers have been bedeviled by AOL's business practices for years and occasional lawsuits and prosecutions have done little to stem the tide of complaints.

In January of 2002, Joel of Arnold, Calif., told ConsumerAffairs.com: "I was unable to quit my AOL account. I called on numerous occasions trying to stop charges to my bank card."

Five years and thousands of complaints later, Gwen of Fort Washington, MD, said in a June 20, 2007, complaint to ConsumerAffairs.com: "AOL refuses to cancel my account and stop charging my credit card. I canceled my AOL account Nov 2006,"

The settlement seeks to resolve complaints that AOL failed to disclose terms and conditions of paid service and made it extremely difficult for consumers to cancel their AOL pay services. Under today’s agreement AOL will make a number of improvements including: easier cancellation procedures, improved billing disclosures and commitment to refunding unauthorized charges.

Historically, AOL’s primary service has been dial-up Internet access, typically offered through a free trial offer that requires consumers to cancel their accounts to avoid a monthly membership fee. AOL announced in August 2006, that it would begin limiting its role as an Internet access provider and start allowing customers to convert to free e-mail accounts.

“Today’s agreement will minimize the potential for consumer confusion during the transition to free e-mail accounts,” said California Attorney General Edmund G. Brown Jr.

Rewards for "Saves"

Prior to this settlement, AOL only allowed customers to cancel their service by fax, mail or telephone.

The majority of consumers called AOL directly and wound up speaking with service representatives who earned rewards, in some cases up to $3000 per month, for persuading customers not to terminate service. Consumers complained that this practice of trying to “save” customers made cancellation extremely difficult if not impossible.

Today’s settlement puts strict limitations on the practice of “saving” customers and requires recording and verification of these telephone calls. In addition, consumers are now able to easily cancel service online at: http://cancel.aol.com.

Billing Practices

Today’s settlement also requires AOL to change confusing billing practices. AOL will clearly disclose how terminated accounts are reactivated and the customer must now resubmit any payment information before AOL can reactivate a paid service.

The company will also clearly disclose the exact charge that will be placed directly on a customer’s monthly telephone bill.

AOL will also revise its practice of allowing consumers to create “spin off” accounts, which are additional paid accounts for AOL service that stem from one original membership. Under the settlement, these accounts can now only be created over the telephone and customer service agents must completely disclose the exact additional cost of creating a “spin off” account.

"I am being double billed by AOL and I only have one account," said Josephine of Trenton, N.J., on June 19, 2007. "I am the only person living here."

"AOL billed my credit card for the monthly fee of April for 25.90. THey also billed on the same day my debit card for 25.90 five times (129.50), I have made countless phone calls to their customer service dept. and to their Fraud dept with no luck," said Eduardo of Kennesaw, Ga., in April 2007.

The agreement also requires AOL to give refunds to consumers who complained of unauthorized charges for AOL service. If a consumer can show AOL billing after a cancellation attempt, AOL will refund those charges. The company will continue cooperating with the states to resolve outstanding complaints and continue refunding consumers for unauthorized charges.

That may be helpful to consumers like Phyllis, of Tuttle, Okla., who said: "AOL put an unauthorized internet access charges on my phone bill. I called and explained that I used OEC and do not use AOL at all for a provider.

"The woman looked up my account and agreed there was no activity and said she will credit the account and close it out. Next month I get another bill on my phone bill and the previous charges that they did not credit."

Under the settlement, AOL must provide a proper mailing address, fax number, and e-mail address where consumer complaints may be forwarded.

States participating in the settlement include: 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, Texas, Utah, Vermont, Washington, West Virginia Wisconsin, and Wyoming, the Commonwealths of Kentucky, Massachusetts, Pennsylvania and Virginia, and the District of Columbia.

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