Attorney General Rowe Announces Settlement With America Online Regarding Cancellation Issues

July 12, 2007

Maine Attorney General Steve Rowe today announced a 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 further ordering refunds for consumers.

The settlement, which was filed by Maine and 47 other states as well as the District of Columbia, resolves complaints in which consumers have alleged difficulty and confusion in attempting 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. 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

"Because AOL made it nearly impossible to cancel accounts, consumers were often saddled with products they did not want." Rowe stated. "This settlement forces AOL to adopt cancellation methods that are easy for consumers to use."

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 the 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 regarding reactivation of terminated accounts as well as its disclosures relating to accounts billed directly to a consumer's monthly telephone bill. AOL will also 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 was not providing customers the opportunity to be informed about services they had purchased." Rowe added, "AOL can no longer hide information. New disclosure rules will let consumers know exactly what services they are receiving, and at what cost."

The settlement further requires AOL to reimburse Maine $45,000. The settlement for the 48 states and the District of Columbia totals $3,000,000.

The other participants in today's settlement are the states of 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.

David Loughran, Special Assistant to the Attorney General
(207) 626-8577 or