SEATTLE - State Attorney General Christine Gregoire signed a letter of agreement today with America Online, an online service provider headquartered in Virginia, resolving allegations that AOL had violated Washington's Consumer Protection Act in marketing their new pricing and service plan.
AOL had planned to bill its subscribers at a new $19.95 rate for unlimited service without their positive assent to it. If subscribers failed to tell AOL they didn't want the service, they would have automatically been billed for it.
The agreement requires AOL to immediately begin notifying customers of the upcoming pricing change by using a "pop-up" screen which appears when subscribers first accesses the AOL online system. Customers must make a positive choice before March 31, 1997 between the new pricing plan and other options to proceed to other AOL services. Included in the options is the choice to stay at AOL's current basic plan of $9.95. The new screen is expected to be in place within the next three days.
The Attorney General's Office entered negotiations with AOL several weeks ago after alleging that AOL was marketing its new pricing and service plan by using a negative option sales plan which could deceive consumers into paying for a service they didn't want, didn't agree to buy and for which they were not legally obligated to pay.
"It should be the customer's choice whether to switch to this new service plan," said Gregoire. "By burying the information and then assuming that the customer's silence meant agreement to the change, AOL had effectively taken the decision out of the customer's hands."
Subscribers who elect to remain at the $9.95 rate after their December billing date will be credited retroactively to that pricing plan as of their December billing date.
"Our concern isn't about the pricing structure, it's about the way it is marketed," said Gregoire. "Without these changes in the notification plan, many subscribers would have found themselves unwittingly paying the higher price."
A group of 17 Attorneys General in other states is also examining AOL's marketing practices and may take further action.
For more information or to file a complaint, call the Attorney General's Office at 1-800-551-4636.