In re AOL and CompuServe

Citation: In the Matter of America Online, Inc. and Compuserve Interactive Services, Inc. Docket No. C-4105, File No. 002 3000 (Sept. 23, 2003).

Factual Background
The Federal Trade Commission charged America Online, Inc. (AOL) and its subsidiary, CompuServe Interactive Services, Inc. (CompuServe) with engaging in two separate unfair acts and practices. The first allegation involved AOL's continuing to bill AOL Internet service subscribers after they asked to cancel their subscriptions. The other allegation involved the late delivery of $400 rebates to consumers who signed up for CompuServe Internet service.

According to the FTC's complaint, most AOL subscribers who want to cancel their Internet service call AOL's customer service department. The complaint alleges that AOL's customer service representatives were responsible for trying to persuade consumers to change their minds about cancelling their AOL service. The FTC charged that AOL failed to implement appropriate measures to ensure that all customer requests for cancellation were properly executed. As a result, in numerous instances, subscribers who requested cancellation continued to be charged monthly service fees. The complaint alleges that this unfairly harmed consumers.

The complaint also alleged that AOL and CompuServe failed to deliver timely rebates to consumers in connection with a $400 CompuServe rebate program. The companies promised consumers a $400 cash rebate toward the purchase of an eligible computer, if the consumers signed up for three years of CompuServe Internet Service at $21.95 per month. They promised that the rebates would be delivered within eight to 10 weeks, and in some cases, 45 days. The FTC alleged that the companies unfairly extended the time period in which they delivered the rebates to consumers, causing substantial injury to consumers whose rebates were not delivered within the time promised.

Consent decree
The consent agreement entered into by respondents required them to establish and maintain appropriate measures for ensuring that subscribers' requests for cancellation are promptly processed and that billing ceases. It also prohibited respondents from charging any subscriber who asks to be cancelled and is recorded as having agreed to continue his or her service ("recorded as saved"), unless they first obtain the subscriber's express informed consent to the continued billing. Furthermore, the settlement required the respondents to send confirmation notices to subscribers who ask to be cancelled but who were recorded as saved. Internet service subscribers would get letters confirming that they agreed to continue their service and informing them of the terms of their continued service. If the subscribers did not wish to continue their Internet service, they would be able simply to mail or fax back an enclosed cancellation request form.

The proposed consent agreement also contained a provision that would require AOL and CompuServe to have a reasonable basis for any claims made about the time frame in which any rebate offered in connection with Internet or online service will be mailed. It also prohibited the companies from failing to provide such rebates within the times they specify or, if no time is specified, within 30 days.