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Did AOL send bogus bills?

Customers sue, saying they said "No thanks" to merchandise pitched on America Online, but that the goods arrived anyway. AOL says it will "vigorously contest" the lawsuit.

2 min read
America Online's sales tactics have landed it in federal court, where it stands accused of billing customers for unordered merchandise hawked in aggressive pop-up advertisements on its Internet service.

A lawsuit filed Friday in San Francisco by former subscribers alleges that the AOL Time Warner subsidiary "unlawfully charged" and withdrew funds for unordered merchandise from subscribers' credit cards, debit cards and checking accounts. The suit also claims AOL collected fees for shipping and handling costs.

AOL rebutted the charges Tuesday, saying it has a full-refund policy plus an online shopping guarantee for its members. The company noted that it regularly offers members an array of products that they can choose to purchase or decline.

"We strongly believe that the allegations are without merit, and we intend to vigorously contest the lawsuit in court," said AOL spokesman Nicholas Graham. "AOL's shopping experience is very straightforward and very practical and convenient for our members and follows standard industry practice for online retailing."

The case highlights the sales tactics of AOL, which built its business on relentless marketing. It continues to tout its merchandising prowess as a core strength after last year's $147 billion merger with Time Warner. With the company's stock price trading near a 52-week low, executives have portrayed e-commerce as a bright spot.

Plaintiffs in Friday's lawsuit took issue with AOL's practice of welcoming members to the site with a pop-up ad pushing products such as Lexmark's printer/fax machine--a pitch made to some subscribers Tuesday. Members can bypass the ads by clicking a "No thanks" button or can request additional information about the product.

A group of California residents who filed the lawsuit said they received items even after clicking "No thanks." Products that appeared on their doorsteps included a desk planner, a digital CD player, a digital camera, a "Gardening for Dummies" book, "Home Depot" books and a "Torreador Bed-in-a-Bag," according to the filing.

Attorneys who filed the lawsuit are seeking approval from the court to add thousands of other individuals whom they say may have similar complaints.

Barry Himmelstein, a partner at Lieff Cabraser Heimann & Bernstein, which filed the suit, said his law firm has been contacted by more than 200 AOL subscribers with similar complaints.

"By the time I got 50 calls, I figured there was a real problem here that needed to be solved," Himmelstein said. "Most of these people tried to solve it with AOL, and apparently AOL has not made any effort to fix the problem, because it continues to happen."