In response to outcry from customers and privacy advocates alike, America Online (AOL) announced that it is dropping plans to give out members' telephone numbers to its business partners.
AOL members have been incensed over the online service's plan to sell subscribers' phone numbers, a plan which first came to light in press reports, including one by CNET's NEWS.COM, which said that on July 31, the company would start making its members' numbers available to companies who do business with the online giant.
Most members didn't know that. Other than posting new terms of service in an area that is not heavily trafficked, AOL had not made other efforts to inform members of these and other changes to their terms of service (TOS). AOL's terms of service contain rules that outline everything from acceptable online behavior to its ability to sell member information.
As word of the changes trickled and then poured out, members sent frantic messages to each other asking how they could prevent their phone numbers from being doled out. The usually sleepy TOS area become so popular that one member even joked that "with all the traffic the TOS area is now getting, AOL probably will start selling ad space on it."
But many weren't laughing. When it comes to online privacy, Netizens have very little sense of humor and AOL members are no exception.
AOL's CEO Steve Case posted a "community update" this afternoon in which he downplayed news of the plan and tried to comfort concerned members. "We realize that privacy is important to you, and you don't want to be inundated with marketing pitches.
"You may have heard that AOL is now selling lists of member phone numbers and email addresses," the update said. "This is not true."
Instead, Case points out that AOL was making phone numbers available only to its own partners. What he didn't mention, however, is that one of the prime partners is CUC International, which is itself a marketing firm.
He added that inviting companies to market their products to AOL customers makes the memberships more valuable, because it allows AOL to offer "special member discounts on popular products and services and to create customized products and services just for members."
It also lets AOL turn a profit. When the online service went to flat-rate pricing in December, executives said that the company would have to start selling goods and products as well as ads and business services in order to make money.
In recent months, it has brought on several companies such as CUC, which pay AOL millions of dollars for the privilege of being able to market to members. Without those deals, AOL would not have turned a profit last quarter.
Those companies may have planned on making telephone calls to members, extending their reach into a known customer base. But today, AOL decided against allowing the calls, apparently in response to member outcry and also to attorneys general concerned that the company was implementing a new policy without telling its members.
At least one attorney general's office was steamed about AOL's apparent lack of notice to customers about changes, an all-too-similar scenario to one that played out several months ago when the service changed its pricing structure with little notice to its customers.
"This issue was about disclosure," said Jennifer Farina, spokeswoman for the New York attorney general's office. "Frankly, I think the outcry from the public was pretty strong when they began to hear about the announcement."
While not apologizing, Case said: "We should have been clearer about the fact that we changed the terms of service and about the rationale for the change."
He added: "Today we decided to change our plans. We will not provide lists of our members' telephone numbers, even to our partners whose products we still plan to offer you. The only calls you might receive will be from us."
This news does not impact AOL's longstanding practice of selling its members' names and addresses to third parties, just like other companies such as magazine publishers.
The company has taken heat from privacy experts and members alike for using information it gets from outside databases to pad membership information, making its lists far more valuable to marketers. Some privacy advocates wondered whether AOL would be making calls on behalf of marketers.
While some object heavily to the marketing of customers, others say that is the price people pay for subscribing to a service and that AOL is no different from many other businesses that routinely sell customer lists.
But at least one company--AOL's chief competitor, Microsoft Network--is using this problem to point out that not everyone sells lists. "The Microsoft Network highly values the privacy of our customers and we do not sell any member information to any third parties," read a statement sent by email.