Attorney General's News Release

July 11, 2007

AOL to revise policies, provide consumer refunds to resolve cancellation complaints in settlement with Nixon

Jefferson City, Mo. — One of the nation’s largest Internet service providers will offer refunds to more than 150 Missouri consumers and reimburse the state $45,000 in a settlement announced today by Attorney General Jay Nixon. America On Line (AOL) will also make significant changes in its policies regarding consumer cancellation and retention as part of the multi-state settlement that included 47 states and the District of Columbia.

The settlement, filed today in Cole County Circuit Court, resolves consumer complaints about the difficulty and confusion they encountered in attempting to cancel their paid AOL services. AOL customers had been given only limited options to cancel their accounts, causing a majority of consumers to attempt to cancel by directly calling AOL. AOL’s customer service representatives received incentives for retaining or “saving” customers in lieu of cancellation. Consumers complained that as a result, cancellation was extremely difficult, if not impossible.

“Today’s agreement puts strict limitations on AOL’s practice of making cancellation virtually impossible, and requires recording and verification of these telephone calls,” Nixon said. “In addition, the settlement expands consumers’ options by allowing them to cancel through a simple online method. We are pleased the company recognized that its policies were harming consumers and is making corrections to those policies accordingly.”

Nixon says today’s agreement also requires AOL to make broad refunds to consumers who have complained of unauthorized charges for AOL service. In addition to resolving any outstanding complaints, the company will be adopting an ongoing process of refunding consumers for unauthorized charges, and will continue to cooperate with the states in these efforts.

In all, the Attorney General’s Office received nearly 200 complaints about AOL’s practices. All consumer complaints will be forwarded to AOL for the payment of refunds, which will be monitored by Nixon’s office. More than 150 consumers may be eligible for the refunds.

The settlement also addresses a number of other billing practices that created consumer confusion.

Specifically, AOL will be revising its disclosures regarding reactivation of terminated accounts and accounts billed directly to a consumer’s monthly telephone bill. AOL will also significantly revise its practice of allowing consumers to create “spin-off” accounts - which are additional paid accounts for AOL service stemming from one original membership. Such accounts can now only be created over the phone in a recorded conversation with a customer service agent, who must make detailed disclosures of the applicable costs.

The settlement further requires AOL to reimburse the participating states $3 million for the costs of the case, including $45,000 to the state of Missouri.

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Inquiries from consumers should be directed to consumer@ago.mo.gov or 1-800-392-8222 (from within Missouri) or 573-751-3321 (outside Missouri).

All media inquiries should be directed to Press Secretary John Fougere.

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