AOL offers refunds to appease angry customers
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.
"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
"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
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
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
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
For more information from the Illinois attorney general's
office, consumers may call the toll-free number
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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