Prodded by Spitzer, AOL to modify customer service

It will be easier for America Online subscribers to cancel their service thanks to an agreement between the company and the office of New York Attorney General Eliot Spitzer, Spitzer's office announced Wednesday in a statement.

After receiving about 300 complaints from consumers who had experienced trouble getting AOL to cancel their subscriptions, Spitzer's office began an inquiry into the matter. It found AOL had a system to reward customer service representatives who managed to dissuade people who called to cancel their subscriptions.

"In many instances, such retention was done against subscribers' wishes, or without their consent," the statement reads.

Customer service representatives were expected to dissuade a minimum percentage of callers from cancelling, and were rewarded with bonuses if a certain percentage of subscribers declined to cancel, according to Spitzer's office.

"These bonuses, and the minimum 'save' rates accompanying them, had the effect of employees not honoring cancellations, or otherwise making cancellation unduly difficult for consumers," the statement reads.

"We're pleased to have reached this agreement with the State of New York," said AOL spokesman Nicholas Graham in an interview.

The agreement is in the form of a legally binding document called an assurance of discontinuance, Graham said. Spitzer's office agrees not to take further actions against AOL on this matter, as long as the company complies with certain requirements, he said.

According to Spitzer's office, these conditions include that AOL will not require customer service representatives to dissuade a minimum number of subscribers from cancelling to earn a bonus, and will record all service cancellation requests and verify action through a third-party monitor.

The agreement also requires AOL to give refunds to all New York customers who claim to have been harmed by the improper cancellation practices in question. In addition, AOL is required to pay US$1.25 million to the state.

AOL is in the process of making the necessary changes to comply with the requirements and expects to be fully compliant by June 2006, Graham said.

Although the changes are being implemented as a result of the review by Spitzer's office on behalf of New York customers, the modifications will apply to and benefit all AOL members, Graham said.

Spitzer's office began its review in February 2004, and AOL cooperated fully with it, Graham said. The Attorney General's office never took the step of filing a lawsuit against AOL, he said.