SEATTLE - May 28, 1998 -- Washington Attorney General Christine Gregoire and 43 other attorneys general have negotiated a $2.6 million national settlement with America Online (AOL) that gives consumers important new protections.
“Consumers have a right to be notified in advance whenever there is a price increase or a substantial change to their services,” said Gregoire. “Only with all the facts can consumers make informed choices.”
Gregoire points out that AOL failed to consider some basic consumer protection principles when making changes in their rates of service, offering free trials of service and charging for calls which consumers thought were toll-free.
“AOL agreed to correct their problems,” said Gregoire. “Others in the online industry need to examine their practices and make sure they're following these rules as well.”
The AOL settlement provides the following protections for consumers:
- If AOL increases its monthly fees or otherwise modifies its contract, it must provide clear and conspicuous notice of the change at least 30 days in advance. The notice is to be delivered by e-mail, a pop-up screen, or the U.S. mail. The notice will describe the change, state its effective date and direct the subscriber to an area where the change is described in greater detail. If such notice is not delivered, a subscriber is entitled to a refund on any price increase.
- Under terms of AOL's “Free Trial Offer,” the company must make new disclosures, including that the 50 hour free trial must be used within a month, that the consumer must cancel the trial to avoid billing, and that consumers should be careful to determine if AOL maintains a local access number in their area to avoid long distance charges. If consumers cancel their AOL service, procedures will be explained clearly in AOL under “Keyword: Cancel” and “Terms of Service.” The company also must mail a notice of cancellation.
- AOL has agreed to notify all consumers, via pop-up screen, when they enter a game or other premium service area where charges are incurred beyond the monthly fee. The pop-up box will state the rate per minute of the extra charges.
- AOL also has agreed to provide improved online tools to prevent unauthorized purchases. These tools include restrictions on setting up “sub-accounts” for children and blocks of certain pop-up screens –measures designed to help parents supervise or prevent their children from making certain online purchases.
The Attorney General's Office has received nearly 300 complaints against AOL since 1996 and has participated in two other multi-state actions against the company. In March 1997 Washington and 35 other states signed a settlement with AOL that ensured consumers would have access to the company's $19.95-a-month unlimited service promotion and provided refunds and credits for those who were unable to attain service.
In 1996, Washington was the first state to sign an agreement with AOL that gave consumers clearer notification when the company switched them to the $19.95-a-month plan. Nineteen other states subsequently entered into a similar agreement.
As a result of these prior state actions, AOL has paid $34 million to consumers in restitution.
Under this agreement, Washington will receive a portion of the settlement as costs and fees. Other participating states include: Alabama, Alaska, Arizona, Arkansas, California, Connecticut, Florida, Georgia, Hawaii, Idaho, Iowa, Indiana, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Utah, Vermont, Virginia, West Virginia, and Wisconsin.
Consumers wanting more information or to file a complaint against a business should contact the Attorney General's Office at 1-800-551-4636 (1-800-833-6384 for the hearing impaired).