AOL, one of the U.S. largest Internet service providers, will pay more than $3 million to settle complaints from customers that were charged for unauthorized services. Typically, AOL offered its services through free trial offers that would require consumers to cancel their accounts to avoid a monthly membership fee. However, customer service representatives received incentives for retaining customers, resulting in enraged customers who just couldn't cancel their accounts.
But AOL's poor business practices haven't paid off well over the years. The company ended March with 12 million U.S. subscribers, down from 21 million less than two years ago. Customers have been deserting with greater frequency since last August, when AOL began giving away free e-mail service, in hopes of earning revenue from advertisements.
Under today's agreement AOL will also offer refunds to consumers who complain to the company or through the offices of states' attorneys general. The company has agreed to improve the way that customers can cancel their services, and to offer better billing disclosures. The settlement money will go to 48 states and the District of Columbia, which plan to use the money for consumer education and to fund consumer-fraud investigations.
AOL faced similar legal problems in 2005 for frustrating customers' attempts to dump the internet access service. The company ended up paying $1.25 million in penalties and costs.