The Washington state attorney general's office forced the online company's hand with its strong "negative option" law, which makes it illegal for companies to charge customers for goods or services that they have not ordered, said Paula Selis, senior assistant attorney general for Washington.
This agreement does not get AOL off the hook with attorneys general from 17 other states and Guam, who continued to negotiate with AOL today over the pricing. Theoretically, each state could ask for a separate remedy.
Meanwhile, the Washington agreement will affect all AOL users, regardless of where they live. In a few days, AOL will put up a splash screen that requires users to choose between the $19.95 unlimited pricing and "other options" before they can use the service, according to the agreement.
If they choose "other options" they will then be allowed to retain their old rate of $9.95 for five hours a month or choose a variety of other plans. After making their pricing choices, users will then be allowed to use the service.
AOL had planned to start automatically charging the new rate to anyone who had been paying the $9.95 rate, unless they chose otherwise.
Selis maintained that AOL's old billing option made it difficult for users to find that they could retain their own plan.
"There was a real lack of information," Selis said. "People were only getting information after ferreting through a bunch of screens. They were requiring people to opt out of the $19.95 service rather than requiring a positive option to receive it. We thought that wasn't fair to consumers."
Now, she said, "the notice is up-front. You're essentially required to make a choice."
AOL spokesman Michael Gross said the company is "pleased to have reached an agreement with state of Washington regulators. We've said all along that we would make massive efforts to inform all of our members of our new unlimited pricing and that we would accommodate any member who notified us that they preferred the old hourly rate."
He added that AOL has "been moving forward with this member outreach, and the response has been overwhelmingly positive."
The Washington attorney general's office contacted AOL about the pricing this month after a user complained about the rates were being implemented, Selis said. Despite today's agreement, AOL spent the day today negotiating with those attorneys in Texas, said Jack Norris, assistant attorney general for the state of Florida.
"We wouldn't have spent the whole day negotiating with them if we were comfortable with the Washington agreement," Norris said. "I think we're working toward a resolution but haven't achieved one yet.
"The agreement negotiated by Washington will have to be implemented throughout the United States, but it is not binding on any of the attorneys general," Norris added. "All the attorneys general are very independent. What we're trying to do is protect the public."