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AOL Long Distance hit with slamming charges

Brian Livingston has the scoop on why AOL customers have good reason to check their monthly financial statements more carefully than ever.

AOL Long Distance, a telephone service marketed by America Online, is the subject of an investigation by an agency that's received more than 1,000 complaints of improper credit card charges and unauthorized transferring, or "slamming," of long-distance customers.

Since 1997, AOL's long-distance service has been provided by Talk America, a Virginia-based telecom company. Talk America says 85 percent to 90 percent of its 1.5 million long-distance customers were acquired through AOL marketing.

America Online aggressively sold AOL Long Distance to its customers through techniques such as pop-up windows and direct mail. In one promotion, AOL sent customers checks for $25. If such a check was cashed, the customer's phone service was switched to AOL Long Distance.

Talk America is now under attack from the Florida Office of Public Counsel, a state agency that represents consumers in regulatory actions. The Public Counsel last month asked state officials to take action after logging 1,041 complaints from Florida consumers.

Charles Beck, deputy public counsel, said in an interview that his office has filed legal papers seeking Talk America's customer records for inspection. Rick Moses, bureau chief for Florida's Public Service Commission (PSC), which regulates telephone companies, confirmed that Talk America and its affiliated companies are facing legal sanctions. "We've had an investigation going on for some time," he said.

The Public Counsel, in a petition to the PSC, asked the commission to consider whether to "revoke the companies' certificates, fine the companies or take other appropriate action."

Unhappy AOL Long Distance users aren't limited to Florida. Randy Abrams, national sales director for CNI Telecom, a consulting firm, has compiled hundreds of such complaints. "In addition to credit card numbers, AOL gave checking account information, because many people debit their checking accounts to pay AOL," he said.

Former AOL member Yan Wang of California said in an e-mail exchange, "My phone service was switched to AOL Talk long-distance service in December 2000...I contacted them, and they told me they got information from AOL and charged my card that I used to sign up for AOL service."

Talk America's director of investor and public relations, Ruth Abeshaus, said in an interview, "Our orders are verified once and verified twice. People sign up for our service and then claim they didn't sign up."

She added, however, that AOL last week gave 60 days' notice that it was terminating Talk America's exclusive long-distance relationship with the online giant.

AOL spokesman Nicholas Graham responded by e-mail, saying that the "ending of our exclusivity with Talk America is in no way related to the Florida consumer case." The regulators' investigation, he emphasized, "in no way involves the AOL service and remains solely a Talk America issue.

"AOL does not share, without member approval or authorization, any credit card or billing information with our partners."

In a related skirmish, a Virginia court is considering a class-action lawsuit filed against AOL by San Francisco law firm Jenkins Goodman & Neuman.

Farley Neuman, one of the firm's attorneys, said AOL Long Distance customers were overcharged more than $75 million from February 1998 to November 2000 because of a mysterious $2.98 "National Access Fee" added to their bills each month. According to the suit, AOL's sales pitch stated: "Are there any monthly fees or term commitments? Absolutely not, no monthly fees, term commitments, or minimum usage requirements."

Neuman said AOL has received, in total, more than $200 million in Talk America payments. The Virginia court on May 4 requested more information from the parties before ruling to certify a class action.

AOL's Graham said the company "is vigorously contesting the allegations brought forth by Plaintiff's counsel."

Consumers are understandably nervous about who can access their credit card numbers. Whether or not you ever used AOL Long Distance, you may have good reason to check your financial statements carefully.

Brian Livingston's column appears at CNET News.com every Friday. Do you know of a problem affecting consumers? Send info to tips@BrianLivingston.com. He'll send you a book of high-tech secrets free if you're the first to submit a tip he prints.