Miller: AOL Landmark Settlement to Protect Consumers
America Online signs 27-page agreement protecting consumers at all stages -- from free trial periods, to ongoing service, to cancellation.DES MOINES-- Attorney General Tom Miller said Thursday that Iowa and 43 other states have signed a formal agreement with America Online that sets standards that can be applied across the new and rapidly growing online industry. Calling the settlement a "landmark," Miller said that the protections give consumers a comprehensive battery of protections and resolve complaints the states have lodged against the nation's largest online service provider.
"We alleged that numerous AOL practices were unfair to consumers," Miller said. "For example, we alleged that AOL offered a so-called free trial offer that was in fact not free if some of the promised number of free hours were used after 30 days. We alleged that consumers sometimes unexpectedly had to pay long-distance charges to access AOL, that AOL sometimes increased its fees without adequate notice, and that consumer cancellation orders sometimes weren't honored quickly enough."
In the 27-page "Assurance of Voluntary Compliance" signed today, AOL agreed to a detailed set of practices the States sought to protect consumers.
"This agreement will give consumers a fair shake," Miller said. "It prohibits certain practices and it makes sure that consumers will receive the information they need to mak e careful choices."
"Although there are tremendous benefits to online communications, there are also pitfalls for consumers," Miller said. "This settlement shows how our consumer protection laws can work to enhance fair competition in a relatively new industry. The settlement will benefit consumers by providing needed protection. And it will benefit the industry by raising consumer confidence in the industry."
AOL agreed to pay the States a total of $2.6 million for legal costs and consumer education, with Iowa's share at $76,363. AOL also has paid a total of $34 million in restitution to consumers as a result of state negotiations in two previous settlements with groups of states. The 1996 action involved AOL switching people automatically to a $19.95-per-month plan, and the 1997 action provided refunds and other measures to resolve online access problems.