AOL to issue refunds

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America Online will issue refunds of up to $39.90 to disgruntled consumers from 36 states who request the online service compensate them for service problems.The office of Illinois State Attorney General Jim Ryan announced in a press conference in Chicago on Wednesday that Illinois and the other state attorneys general expect AOL to sign agreements for the reimbursement plan in all 36 states by the end of Thursday.

The announcement is a surprise, coming less than one week after AOL Chairman-CEO Steve Case stated in TV interviews that his service would not offer special refund plans because of AOL's network capacity problems. The problems were sparked, some say, by AOL's $19.95 flat monthly pricing fee announced last quarter.

Last week, Attorney General Ryan's office held a meeting of 20 state AGs to discuss how they could come to an agreement with AOL over their residents' concerns. Since then, approximately 16 states joined the debate.

Under the agreement announced Wednesday, AOL will reimburse consumers who file complaints within four months to their state attorney general or AOL. Refunds are applicable for the months of December 1996 and January 1997. Consumers who used the service less than two hours are entitled to 100% refunds for each month, while subscribers who used the service from two to eight hours are eligible for 50% refunds and those who used it from eight to 15 hours get 25% refunds.

If as few as one in 20 AOL subscribers file for the minimum refund, it could amount to nearly $4 million in reimbursement. It's unclear how AOL will determine the number of hours a user has been online.

A spokesman for Attorney General Ryan's office said late on Wednesday that AOL's Mr. Case had added "an additional piece of relief for consumers ... AOL will give away one month free, no questions asked, to subscribers who [contact] AOL" to request the program.

AOL, under terms of the agreement, was also asked to continue its restrictions on image advertising for the month of February. The service could not be reached for comment regarding its ongoing direct response campaign advertising 50 free hours of service.

In addition, AOL was asked to add recorded messages on its toll-free cancellation line about how to cancel by mail, fax and online methods and add extra operators to process cancellation requests. It's also supposed to provide compliance reports within 15 days to all states.

Copyright January 1997, Crain Communications Inc.

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