AOL issues refunds

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America Online reportedly has begun issuing refunds to customers, despite Chairman-CEO Steve Case's claim during a Friday TV interview that the company would not consider offering refunds to disgruntled subscribers.

The service, he and spokespersons have contended, will continue to extend its current refund policy to subscribers who cancel their accounts, but said AOL will not offer special refunds. Executives at AOL did not return phone calls.

Refunds, however, are what at least one of seven states pursuing legal action against AOL want as a form of retribution for slow service and frustrating busy signals at log-on. At least six states have filed class-action suits against AOL for service problems, which some states attribute to a $19.95 flat-fee price structure introduced during the fourth quarter of 1996.

Asked on Tuesday if refunds are an important plank in negotiations this week between the office of New York State Attorney General Dennis G. Vacco and the online service, spokesman Marc Carey said "Absolutely! That's the most important thing."

Mr. Vacco's office served AOL with papers last Thursday, stating that if AOL failed to continue dialogue with New York and did not present a written response to the papers, then the state would sue. Some 600,000 New York residents currently use AOL, representing more than nine percent of the service's 8 million customers, according to Mr. Vacco's office.

Copyright January 1997, Crain Communications Inc.

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