The AOL List: Shell Games

David Cassel (
Fri, 15 Nov 1996 20:03:12 -0800 (PST)

			S h e l l   G a m e s 	


In June Newsday reported the New York state attorney-general's office had
launched a formal investigation into AOL's billing practices.  Soon other
sources revealed that 14 state attorneys general were investigating the
company.  AOL's spokeswoman confirmed there was an "ongoing dialogue"--and
that complaints from AOL users had sparked an FTC investigation. 

Tomorrow's Washington Post reports that attorneys general are now
investigating AOL's "default double" pricing plan.  The company comes
under fire for doubling the rates of all members who pay $9.95 a month
unless they pro-actively request their current rate.  Two analysts have
gone on record as saying the move is cash-related:  AOL stands to make $50
million more that month--and each month--if the estimated 5 million
subscribers currently paying $9.95 a month don't reclaim the difference. 
(For comparison, AOL's total profits in the April-June quarter were just
$29.2 million.)

This raises the prospect that difficulties former users had in cancelling
their accounts were cash-related.  This has been the subject of several
news articles, as recently as the San Francisco Chronicle's October 3
story, "AOL Slow To Cancel Unwanted Accounts".  Other articles stretch
back two years--USA Today's "Help! I've gotten on line and I can't get
off!" (6/30/96), "Unplugging from AOL not simple, say ex-customers"
(11/22/95, Knight-Ridder), and "America Online Needs Lessons in Service"
(2/22/95, San Francisco Chronicle.) In the last year, nearly one hundred
users sent complaints to a web page criticizing AOL, saying the company
continued billing after their accounts were cancelled. 

Will things get better?  After the first investigations, USA Today wrote
that "America Online says it plans to change billing practices that have
customers and regulators complaining. But it has yet to offer many
specifics."  In fact, as recently as two months ago the hold-time before
reaching a billing representative could pass 30 minutes.  And yet 30% of
Tuesday's lay-offs came from customer service. 


Thursday's New York Times reported that earlier this week, "as part of a
broader announcement by AOL that it was laying off 300 of its 5,900
employees," AOL announced the closure of GNN.  They're two weeks late;
that closure was reported here and elsewhere on October 29. 

          Billing Information -

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