ROANOKE TIMES
Copyright (c) 1997, Roanoke Times
DATE: Thursday, January 30, 1997 TAG: 9701300048
SECTION: NATIONAL/INTERNATIONAL PAGE: A-1 EDITION: METRO
THE MARKET LEADER will offer refunds based on how much a customer was able to access the Internet in December and January.
Threatened with lawsuits across the country, America Online agreed Wednesday to give refunds to customers who haven't been able to log on because of the overwhelming demand created by AOL's flat $19.95-a-month rate.
Customers will be offered either cash or a month of free service. AOL had no immediate estimate of how much the settlement will cost.
The settlement was reached with 36 state attorneys general but applies to all 8 million of AOL's customers nationwide. Several of the states had threatened to sue America Online unless it promised refunds.
The nation's largest on-line service also agreed to make it easier for dissatisfied customers to cancel and said it will suspend its advertising for a month.
America Online, based in Dulles, Va., previously said it was selectively giving refunds. But it had refused to give blanket reimbursements.
The states had complained that AOL signed up hundreds of thousands of new customers without the means to accommodate the heavy usage. Some computer users trying to get on line have gotten busy signals for hours on end.
``Under the consumer fraud laws of this state and many other states, you can't offer something to a subscriber and then not be able to deliver,'' Illinois Attorney General James Ryan said.
An America Online spokeswoman had no immediate comment. AOL previously said it plans to spend $350 million by June on equipment and staff to handle the demand.
In addition to the busy signals, AOL users also have seen a recent rash of technical glitches such as e-mail ``brownouts'' that occurred while America Online was trying to upgrade its network.
Refunds will be based on how much a customer was able to access AOL during December and January.
Customers will get a full refund for each month in which they connected for less than two hours. Customers who used less than eight hours during the two months will get back 50 percent.
People who connected for more than eight hours but less than 15 will receive 25 percent refunds. Anyone who used more than 15 hours will not be eligible for a refund.
Instead of a refund, a customer can make a written request for a free month of service.
AOL will suspend advertising during February and add a disclaimer to ads thereafter warning that people may encounter delays logging on.
In addition, the company agreed to make it easier for unhappy on-line customers to drop out, including adding more phone operators, more lines for faxed cancellations and detailed on-line instructions.
America Online stock shot up $1.75 to $37 on the New York Stock Exchange. Analysts viewed the settlement as a necessary move by America Online to get past a barrage of bad publicity.
``A long, drawn-out litigation would inevitably distract management at a time when AOL needs to critically focus on the right mix of gaining new customers and retaining existing customers in the threat of the wild frontier of the Internet,'' said Peter Kastner, an analyst at Boston-based Aberdeen Group.
LENGTH: Medium: 65 linesby CNB