By JIM SUHR, AP Business Writer
A lawsuit seeking to potentially cover hundreds of thousands of
America Online Inc. subscribers accuses the Time Warner Inc. unit of
illegally billing customers by creating secondary accounts for them
without their consent.
The lawsuit, filed last month in St. Clair County Circuit Court on
behalf of 10 AOL customers in six states, claims the company confused
and deceived customers about the charges, stalled them from canceling
unauthorized accounts and refused to return questioned fees.
"AOL exploits its subscribers' confidential billing information to
unlawfully generate additional revenue by charging subscribers for
additional membership accounts that they neither order nor request,"
the lawsuit alleges, calling the scheme "common, uniform and
continuing."
The lawsuit, seeking class-action status, mirrors more than a dozen
other actions that have been pending in state and federal courts
throughout the country, said Stuart Talley, a Sacramento, Calif.,
attorney representing the plaintiffs in the Illinois lawsuit. All of
the federal cases were consolidated in California two years ago,
Talley said.
Nicholas Graham, an AOL spokesman, said the Dulles, Va.-based company
considers the Illinois lawsuit "a legal rehash that has as much legal
value as refiling your personal income taxes from four years ago."
"The important thing is that we deny the allegations now as we've done
several times, and we will defend this case as we have other cases
accordingly," he said, noting that AOL "takes extraordinary efforts to
resolve any issues the members raise."
"We have safeguards in place now that prevent unauthorized charges,
and we have credit and refund policies that do justice to the
consumer," he said.
The lawsuit also names ICT Group Inc., a Newtown, Pa.-based
outsourcing company AOL retained to respond to customer complaints and
billing matters. Messages with ICT seeking comment were not
immediately returned Friday.
Plaintiffs include an Illinoisan, two Californians, three Tennesseans,
a West Virginian, two Alabamans and a New Yorker.
No hearing date has been set on the Illinois case, which accuses AOL
of violating Illinois' Consumer Fraud and Deceptive Business Practices
Act.
The latest lawsuit alleges that AOL misrepresented that subscribers
may add up to seven different screen names to a membership account for
free. But AOL "in many instances" spun off those screen names into
additional membership accounts without the subscribers' knowledge,
then charged and collected a separate monthly fee for each account.
The company requires members to pay charges and fees by credit card,
electronic withdrawals from their bank accounts or by adding to their
telephone bills, giving subscribers no opportunity to review a bill
before making a payment, the lawsuit claims.
To maintain its customer base, according to the lawsuit, AOL has
instructed customer-service contractors such as ICT to prevent AOL
subscribers from canceling their accounts "at all costs" and to resist
giving refunds. Customers who complain are offered at least one month
of free AOL Internet service instead of refunds or credits, while
"unsatisfied customers who insist on canceling or terminating their
AOL memberships are obstructed and delayed from doing so," the lawsuit
claims.
New York-based Time Warner -- the world's largest media company -- has
been holding exploratory talks with companies including Microsoft
Corp. about a potential investment in or sale of AOL, which has become
a hot property because of its booming advertising sales and ability to
draw in large audiences online.
AOL long was seen as a drag on Time Warner due to the steady decline
of the dial-up Internet access business. But in recent months AOL
successfully has been revamping its business model, moving away from
the subscription business and selling more online advertising.
On the Net:
America Online, http://www.aol.com
ICT Group Inc., http://www.ictgroup.com
Copyright 2005 The Associated Press.
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Jim Suhr (ap@telecom-digest.org)