AOL Will Settle Billing Allegations
America Online Inc. has agreed to provide subscribers with an hour of free connection time to settle lawsuits that accuse it of misleading billing practices, plaintiffs’ attorneys said Friday.
The settlement would end 11 class-action lawsuits brought in California over America Online’s obscure practice of rounding upper-minute access charges.
The biggest online company also agreed to plainly disclose its billing practices when customers sign up for its online service, according to plaintiffs’ attorneys.
Judge James Robertson II of the San Francisco Superior Court gave preliminary approval to the settlement, the attorneys said. The settlement is subject to final court approval after a public hearing.
A representative of Vienna, Va.-based America Online did not immediately return a phone call seeking comment late Friday.
The settlement would apply to customers who were subscribers of America Online between July 15, 1991, and March 31, 1996.
During the period to be covered by the settlement, America Online charged $10 a month for five hours of connection time and about $3 for each additional hour. Just this week, the company’s primary fee changed to $20 a month for 20 hours of time with hourly rates beyond that.
The precise number of customers that would be covered by the settlement could not be determined. The company had about 5.5 million subscribers March 31. The plaintiffs did not know how many people were customers at some point during the period but had canceled their subscriptions before March 31, attorney G. Oliver Koppell said.
Those who spent more than $300 on America Online connections during that period will get another free hour for each $300 in charges.
Former subscribers who spent $300 on America Online during the period will eligible to receive cash compensation on a similar basis through a simple claims process.
Details of the settlement were released by attorneys Brian W. Newcomb of Menlo Park, Calif.; Stephen E. Hagen, Palo Alto; and Max W. Berger and Koppell of New York.
America Online in recent weeks has acknowledged that its practice of rounding up charges to the next minute has come under scrutiny from several state attorneys general and the Federal Trade Commission.
Regulators have also asked for information about electronic fund transfer policies and the methods for people to try out and cancel the America Online service.
America Online has grown quickly, from 1 million subscribers in early 1994, outpacing rivals CompuServe Inc. and Prodigy Services Co. But its growth has slowed sharply the last few months. The company has invested in systems to improve its service this summer and plans a new marketing push this fall.
