North Carolina Department of Justice
North Carolina Department of Justice
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AG Cooper announces settlement with AOL over cancellation practices

Release date: 7/11/2007

Internet service provider agrees to better disclosure, refunds for consumers

Raleigh: Attorney General Roy Cooper today announced a $3 million settlement with AOL, one of the nation’s largest Internet service providers, over the company’s cancellation, refund and billing practices.

“Consumers told us that it was virtually impossible to cancel their internet service, even when they followed the required steps,” said Cooper. “Now they can cancel without getting the run around.”

The settlement reached by Cooper and 48 other state attorneys general, resolves allegations that AOL made it difficult and confusing for consumers to cancel the company’s Internet service. The settlement also provides refunds to consumers who complained about unauthorized charges.

In the past, AOL limited the methods consumers could use to cancel their accounts, which resulted in the majority of consumers calling AOL directly. Once on the phone, AOL customer service representatives often tried to talk the customer out of cancelling. AOL gave its representatives incentives for retaining or “saving” customers who called to cancel, and consumers complained that cancellation was difficult if not impossible.

Today’s agreement puts strict limitations on this practice and requires all cancellation calls to be recorded. In addition, the agreement allows consumers to cancel the service through the website Upon cancellation, AOL has agreed to provide upfront information about fees or penalties, a cancellation confirmation number and an effective date of cancellation.

The agreement further requires AOL to provide refunds to consumers who complained about unauthorized charges for AOL service. Cooper’s office has received 137 complaints from North Carolina consumers about unauthorized charges. Those consumers will receive notification from AOL about the status of their refunds. In addition to resolving outstanding complaints, the company will also adopt a refund process for future unauthorized charges, and will continue to work with the states to get refunds to consumers.

Today’s settlement also addresses a number of other billing practices that generated complaints from consumers. AOL agreed to revise its disclosures on reactivation of terminated accounts and accounts billed directly to a consumer’s monthly telephone bill. The company will also change its practice of allowing consumers to create “spin-off” accounts, additional paid accounts for AOL service stemming from one original membership. These 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 costs associate with these accounts.

Along with North Carolina, the other states participating in the settlement are 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.