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AOL users queue up for refunds

Beleaguered America Online is quietly doling out refunds to some angry members on a case-by-case basis.

America Online (AOL) is quietly doling out refunds to some angry members on a case-by-case basis.

While the nation's largest online service is not considering across-the-board refunds to members--at least for now--it is and has been giving refunds to individuals in response to a barrage of complaints about constant busy signals, said AOL spokeswoman Wendy Goldberg. She wouldn't specify how many refunds had been made.

"If people have legitimate claims we absolutely give refunds," she said. "We address problems on a case-by-case basis."

AOL is well aware of its members' frustration and will therefore consider providing refunds to those who can demonstrate a chronic inability to connect, Goldberg said.

At the same time, AOL is not considering blanket refunds to compensate angry members--at least not while AOL is negotiating with 20 state attorneys general over the issue, Goldberg said. The attorneys general, whose offices have been flooded by user complaints since AOL's unlimited access plan went into effect December 1, have charged that AOL is advertising and selling a service that it can't deliver.

Outsiders have speculated the attorneys general will press AOL for some kind of user refund, even though CEO Steve Case told CNBC on Friday that giving refunds "is not something we are considering."

Members have complained bitterly--and many have instigated class action lawsuits--because AOL does not have enough modems to accommodate everyone who wants to get online.

Negotiations with the attorneys general continued today, Goldberg said. AOL is facing a Thursday deadline to respond in writing to concerns raised by at least one attorney general office: New York's. If AOL fails to meet the deadline, New York State Attorney General Dennis Vacco has said he will sue AOL. The state of Washington is considering suing too, but hasn't set any conditions yet for AOL.

Users can call the customer service line at 800/827-6364 to talk to someone about their problems. Although AOL has added people to its customer service department, hold times can still be quite long for those wanting to talk about billing.

AOL has responded to busy signal complaints by issuing public statements saying it is adding more modems and boosting its network. It also has pleaded with members to curtail their use to offpeak hours and to keep their online hours to a minimum.

AOL has said that although it did expect more users to log on with unlimited pricing, it was overwhelmed by how many of them did so. It continues to be overwhelmed both by the number of users wanting to come online and by the amount of time they want to stay.

Critics have countered that AOL officials should have known just how swamped their system would be, and should have been better prepared.

The criticism seem to be catching up to AOL on Wall Street as well. Shares of AOL today fell nearly 7 percent today to close at 34-1/4, despite the fact that Chatfield Dean & Company raised its recommendations for the company from "buy" to "strong buy." The firm suggested that recent negative press had artificially depressed the company's stock price, but that AOL's stock would reach $80 per share within two years.