Oregon Department of Justice

Attorney General Ellen F. Rosenblum

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AG FILES $3 MILLION SETTLEMENT WITH AOL ON CANCELLATION ISSUES

July 11, 2007

Company will refund consumers and modify its cancellation and retention practices

Attorney General Hardy Myers today filed a $3 million settlement with AOL, one of the nation's largest Internet service providers, requiring the company to make significant changes in honoring consumer cancellation requests and to make refunds to consumers. Named in an Assurance of Voluntary Compliance (AVC) filed in Marion County Circuit Court is AOL, LLC (formerly America Online, Inc.) headquartered in Dulles, Virginia. The agreement admits no law violation.

"Thanks to Oregon consumers' diligence in reporting ongoing problems with AOL, our consumer protection legal staff was able to build a 48-member, multi-state group and serve on an Executive Committee that produced an extremely effective settlement," Myers said. "This agreement should ensure that AOL customers will only pay for services they agree to and, if they cancel paid services, they can do so without the hassles AOL customers faced in the past."

The settlement, which was filed by Oregon, 47 other states and the District of Columbia, resolves complaints in which consumers alleged difficulty and confusion in attempting to cancel their AOL paid services. AOL formerly limited the methods available for consumers to cancel their accounts, causing the majority of consumers to attempt to cancel by directly calling AOL. Customer service representatives received incentives for retaining or "saving" customers in lieu of cancellation, and consumers complained that, as a result, cancellation was extremely difficult if not impossible.

Today's agreement puts strict limitations on this practice and requires recording and verification of these telephone calls. In addition, the agreement expands consumers' options by allowing them to cancel through a simple online method via the website at http://cancel.aol.com.

The agreement further 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 Oregon and the other states in these efforts.

Today's settlement also addresses a number of other billing practices that created consumer confusion. Specifically, AOL will be revising its disclosures about reactivation of terminated accounts and its disclosures relating to accounts billed directly to a consumer's monthly telephone bill.

AOL also will 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. 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 applicable costs.

AOL recently announced that it would begin limiting its role as an Internet access provider, allowing its customers to convert to free e-mail accounts. Today's agreement should minimize the potential for consumer confusion during this transition.

The AVC further requires AOL to pay Oregon $195,000 for attorney fees and investigative costs as part of a $3 million payment to be shared by the settlement states.

Consumers wanting more information about this agreement and consumer protection in general in Oregon may call the Attorney General's consumer hotline at (503) 378-4320 (Salem area only), (503) 229-5576 (Portland area only) or toll-free at 1-877-877-9392. The Oregon Department of Justice is online at www.doj.state.or.us.

Contact:

Jan Margosian, (503) 947-4333 (media line only) jan.margosian@doj.state.or.us |
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