America Online agrees to reimburse customers for inability to get online

America Online agrees to reimburse customers for inability to get online

January 29, 1997 2:25 p.m. EST

America Online Inc. has agreed to reimburse customers for their inability get online in a settlement today with 37 states, a source familiar with the agreement said.

AOL also said it would add a disclaimer to any advertisements, starting in February, that customers are having trouble signing on to its online service. The company agreed not to run any ads without the disclaimer.

AOL also agreed to make it easier for people to cancel its service, including more lines for customers to fax in their cancellations.

The settlement is in response to a rash of complaints against the nation's largest online service that it signed up hundreds of thousands of new users without the means to accommodate the heavy usage.

Complete details on the reimbursement weren't immediately available. But the source, speaking on condition of anonymity, said that the size of the any credit would be determined by how much time a customer recently has been online.

Because of the large number of states involved in the settlement, an AOL agreement would affect customers nationwide.

The new customers overwhelmed America Online's computer network because of a new pricing plan that for $19.95 a month gave them unlimited online time. At the same time, AOL undertook a massive advertising campaign to push its service.

The attorneys general scheduled a press conference for this afternoon to announce the settlement.

An America Online spokeswoman had no immediate comment.

The result of the heavy usage is often annoying busy signals for subscribers attempting to log on during peak periods. The company also has been plagued with a recent rash of technical glitches such as e-mail ``brownouts'' as it attempts to upgrade its network to accommodate the new users.

Several states had threatened to sue America Online unless it promises refunds and stops promoting a plan it can't reliably deliver.

America Online, based in Dulles, Va., has previously said it is selectively giving refunds to people who complain about their difficulty getting online. But until now, it had declined to give blanket refunds.

America Online has said it is spending $350 million between now and June to upgrade its network, including buying new modems, building a new data center to house computer equipment and adding more customer support representatives.

The problems in getting online are expected to decrease as the new equipment is installed.

By David E. Kalish

AOL stock movement