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For immediate release – Wednesday, July 11, 2007.
Contact Bob Brammer – 515-281-6699.

AOL to Reform Cancellation Practices

Multi-state settlement requires new retention and cancellation policies and new procedures for consumer refunds.

Attorney General Tom Miller said today that AOL, one of the nation’s largest Internet service providers, must reform how it handles consumer cancellation requests, under a settlement with Iowa and 47 other states and the District of Columbia. The settlement also requires AOL to make consumer refunds and improve refund procedures.

The settlement puts strict limitations on AOL retention practices and requires recording and verification of cancellation telephone calls. The agreement also expands consumers’ options by providing simple on-line cancellation procedures at http://cancel.aol.com.

The settlement resolves allegations by the states that consumers have faced difficulty and confusion when they sought to cancel their AOL paid services. AOL formerly limited the methods available for consumers to cancel their accounts, such that the majority of consumers attempted to cancel by directly calling AOL. The states alleged that 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.

The agreement also requires AOL to make broad refunds to consumers who complained of unauthorized charges for AOL service. In addition to resolving any outstanding complaints, the company will adopt an ongoing process of refunding consumers for unauthorized charges, and will continue to cooperate with the states in these efforts.

Miller encouraged any Iowans with complaints or refund requests to contact the Consumer Protection Division as well as AOL. The address is Consumer Protection Division, 1305 East Walnut St., Des Moines, Iowa 50319. The toll-free number is 888-777-4590. The local number is 515-281-5926. The email address is consumer@ag.state.ia.us. The fax number is 515-281-6771.

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Additional information:

The settlement, or “Assurance of Voluntary Compliance,” also addresses a number of other billing practices that created consumer confusion. AOL will be revising its disclosures regarding reactivation of terminated accounts as well as 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 – additional paid accounts for AOL service stemming from one original membership. These accounts now only can 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. The terms of today’s agreement should minimize the potential for consumer confusion during this transition.

The settlement further requires AOL to reimburse the states $3,000,000. Iowa’s share of the amount is $45,000.

States participating in the settlement are AL, AK, AZ, AR, CA, CO, CT, DE, GA, HI, ID, IL, IN, IA, KS, KY, LA, ME, MD, MA, MI, MN, MS, MO, MT, NE, NV, NH, NJ, NM, NC, ND, OH, OK, OR, PA, RI, SC, SD, TN, TX, UT, VT, VA, WA, WV, WI, WY, plus the District of Columbia.

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