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AOL offers refunds to appease angry customers

America Online graphic

Agreement reached with states

January 29, 1997
Web posted at: 5:15 p.m. EST

CHICAGO (CNN) -- America Online Inc. has reached a four-part agreement with 36 states to refund up to $39.90 to customers who have had trouble connecting to the online service during December and January, an official announced Wednesday.

The world's largest online service also agreed to make it easier for customers to cancel the service and will not advertise in February.

James Ryan

"We believe that the agreement in principle is fair," said Illinois Attorney General James Ryan, who laid out the terms at a news conference. He said the agreement with the states should be signed Thursday.

"It protects consumers while allowing AOL to continue a popular service to millions of subscribers across the country. We intend to remain vigilant in enforcing our consumer fraud statutes in cyberspace and anywhere else that enforcement is needed."

Refund or credit

Consumers will have 120 days after the agreement is signed to file a complaint with either the state attorney general or AOL in order to get a refund. AOL will have 30 days from the time a complaint is filed to comply with the refund request.

In lieu of a refund, subscribers who write the company's post office box within 120 days can be credited for one month of free service.

"In essence there is a short statute of limitation for this agreement," Ryan said.

Unless AOL had reached an agreement with the states, attorneys general had threatened to file consumer fraud lawsuits against the company.

Who qualifies for how much?

AOL customers will be entitled to a full refund if they used the service less than two hours during December 1996 and January 1997, Ryan said.

Those who used the service two to eight hours during the two-month period will be entitled to a 50 percent refund, and those who logged eight to 15 hours can collect a 25 percent refund.

Customers who used the service more than 15 hours aren't eligible under the agreement.

The computer network-service provider changed its fee structure four weeks ago, and has been swamped since then with complaints from frustrated customers who said they were finding it extremely difficult to connect to AOL.

On January 1, AOL replaced its hourly charge with a flat fee of $19.95 per month.

States threatened legal action

America Online screen

Attorneys general from about 20 states met in Chicago last week to discuss possible legal actions against America Online for its failure to live up to promises to provide services to subscribers.

As part of the agreement, AOL also will desist from advertising during February. Ryan said all advertising after that will have to "clearly and conspicuously" inform consumers that they might encounter delays.

AOL also is making it easier to cancel the service by agreeing to hire more operators and making it possible to cancel by mail or fax. There will be cancellation information online.

For more information from the Illinois attorney general's office, consumers may call the toll-free number 1-800-386-5438.

The price of AOL's stock rose about $2.38 to close at $37.63 Wednesday based on anticipation of the settlement signing.


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