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AOL settles charges of unfair practices

Under a proposed settlement with the FTC, America Online will be required to respond quickly to customer requests to cancel their subscriptions.

The Federal Trade Commission on Tuesday agreed to a noncash settlement with America Online and its CompuServe subsidiary for alleged unfair practices in marketing their Internet services.

The FTC had accused AOL of failing to properly cancel all requests for service and continuing to bill some of its customers. The FTC also alleged that AOL's CompuServe subsidiary failed to deliver $400 rebate guarantees for some customers within the time promised by the company.

As a result, AOL members who inquire about canceling their subscriptions, but are then persuaded to continue them, will receive a letter confirming their decision to remain billed for the service. AOL, a division of AOL Time Warner, also will ensure that cancellation requests are promptly processed and billing discontinued.

"No company should retain subscribers against their wishes," Lydia Parnes, deputy director of the FTC's Bureau of Consumer Protection, said in a statement. "When consumers cancel their service, they expect the billing to stop."

Under the consent agreement, AOL will inform future rebate recipients about any delays in sending them their payments. If no timeframe is stated, then the company will send the payments within 30 days.

AOL originally offered the $400 rebate on the purchase of a specified computer for anyone who signed up for CompuServe for three years at $21.95 a month.

In a statement released shortly after the FTC announcement, AOL said it will comply with the consent agreement. However, the company maintained that the penalties did not reflect any willful wrongdoing by AOL.

"The agreement between AOL and the FTC does not contain any statements of wrongdoing or liability by the company," according to a statement from AOL. "It is also worth noting that after reviewing the facts, the FTC decided not to impose any fines or monetary restitution."

The consent agreement will be available for public comment until Oct. 23, 2003, and then the commission will decide on whether to make it stick. The five FTC commissioners voted 5-0 in favor of releasing the agreement for public record.