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America Online Suit Settlement Extends Refunds

By David Segal
Washington Post Staff Writer
Friday, April 4, 1997; Page G01

America Online Inc. announced yesterday that it has agreed to pay additional credits and refunds to subscribers who had trouble accessing the service after the Dulles-based company introduced unlimited-use pricing late last year.

The proposed agreement in the class action suit, which received preliminary approval yesterday from a Circuit Court judge in Chicago, expands on a settlement reached in February with 36 state attorneys general. That settlement, which has since been joined by nine more attorneys general, allowed AOL subscribers who had trouble getting online during December and January to get refunds and credits worth as much as $39.95.

Now, members who had trouble accessing AOL during the months of February or March, including those who had applied in the earlier case, will be able to submit written requests for refunds or credits.

Customers who were online for two to eight hours during those months are entitled to a 50 percent refund of their $19.95 monthly access charge, while members who were online eight to 15 hours are entitled to a 25 percent refund. Members who spent more than 15 hours online are eligible for a free month of service.

Ben Barnow, a partner at Barnow and Goldberg in Chicago and an attorney for plaintiffs in the case, estimated that 7 million to 10 million subscribers would be eligible for refunds and credits under the proposed settlement.

Company officials said yesterday that settling this suit will not further affect AOL's bottom line because they think the costs will be covered by $24 million already set aside to fund claims in the attorneys general case. Fewer subscribers than expected applied for refunds and credits in that case, company officials said.

AOL introduced unlimited-use pricing in December. With members no longer worried about paying for each hour of use, traffic volume shot up and many subscribers got busy signals when they tried to sign on.

Dozens of lawyers filed class action lawsuits against AOL soon after, alleging deceptive business practice. AOL officials said yesterday that the proposed agreement would effectively end all other lawsuits.

"This will allow us to put this issue behind us," said Tricia Primrose, an AOL spokeswoman.

Lawyers with pending lawsuits can press ahead with their cases, according to the company, but everyone who was an AOL member in February or March is eligible for refunds under the settlement.

Moreover, opting out of the suit might be costly for subscribers because doing so would require a plaintiff to travel to Chicago for a hearing about final details of the settlement.

Barnow, the plaintiffs' attorney, said yesterday, "This settlement brings substantial value to the customers, and I'm proud of it."

© Copyright 1997 The Washington Post Company

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