SAN FRANCISCO (06/14/2000) - Even as America Online Inc. waits to finalize its acquisition of Time Warner Inc., it seems to be still struggling with the important little things of running a company, like keeping its customers happy.
On June 8, a suit seeking class-action status was filed against AOL, the world's largest ISP, by a former subscriber living in the Sacramento, Calif., area. Al Mendoza Jr. contends that AOL continued to debit his credit card for months after he canceled his subscription in October 1999. Mendoza says he lost at least $65.85 and had to cancel his credit card to halt the charges, according to the complaint.
The lawsuit, filed in Alameda County Superior Court in California, is just the latest in a long series of customer complaints leveled at AOL. In 1997, AOL settled a multi-state class action filed by some of the millions of subscribers whose service was disrupted when the company switched to a flat-rate payment schedule. Recently, other class actions have been filed against AOL by residents in California, Washington, New York, Arizona, New Jersey and Oregon.
Those suits claimed that AOL failed to inform subscribers that an AOL 5.0 software upgrade would make dramatic changes to users' operating systems and would interfere with a user's ability to connect to the competing ISP networks.
And in May, a Florida law firm filed a class action against CompuServe Interactive Services (a wholly-owned subsidiary of AOL), accusing the company of failing to pay customer rebates in a timely manner.
As for this most recent suit, Mendoza "believed this was a wrong which was being perpetrated on a lot of people, and he wants to correct it," said Kennedy Richardson, Mendoza's attorney. The suit also targets a provision in AOL's subscription contract that requires California subscribers to litigate disputes in Virginia, where AOL has its headquarters. "We believe that is a patently unfair provision," Richardson said. "You've got somebody who usually is going to have a claim for a very minor amount, and AOL is telling them, if you want to sue us, you have to hike all the way across the country to Virginia."
AOL spokesperson Rich D'Amato said he hadn't seen the papers and couldn't comment. According to Jupiter Communications analyst Joe Laszlow, it is common for companies providing online services to include so-called choice-of-law clauses favoring their home states.
Laszlow said he is skeptical that the charges filed in this most recent complaint amount to any more than "bureaucratic oversight." He said AOL has improved its customer service since settling a class action in 1997 that was filed after service to millions of AOL customers was disrupted when the company began offering a flat monthly fee.
"To this day I'm sure they make it as hard as possible for someone to terminate service with them," Laszlow said of AOL. "I think that's in their interest, given that up to 5 to 10 percent of ISP subscribers will cancel in a given month." Richardson, who filed the lawsuit on behalf of California subscribers, declined to disclose whether other AOL customers have come forward. He is seeking an injunction against AOL, refunds of incorrect charges and punitive damages.