America Online settles suits with free time Company agrees to end billing claims

July 06, 1996|By BLOOMBERG BUSINESS NEWS

WASHINGTON -- America Online Inc. yesterday agreed to give its subscribers millions of hours of free online time, settling 11 private class-action lawsuits about disclosure and billing practices at the country's leading online service.

Lawyers representing America Online users said they have filed a proposed settlement of their claims in a San Francisco state court, where the terms must be approved by a judge.

"We believe that this settlement represents a fair resolution of claims raised against America Online in numerous lawsuits," the class-action lawyers said in a joint statement.

The lawsuits charged that consumers were misled about the fact that charges for time spent online are rounded up to the next full minute. America Online and other online information providers commonly provide a certain amount of time for a set monthly fee and then impose extra charges according to how much time a computer user spends online.

The suits also claimed that America Online added 15 seconds to each session for "connection" time, and sometimes billed customers for time spent in so-called "free" areas.

The proposed agreement covers claims by people who subscribed to America Online between July 15, 1991, and March 31, 1996.

Under the proposed settlement, people who are current subscribers to the service when the terms are approved will get one hour of free time. Subscribers who have spent more than $300 with America Online during the period covered by the case will get more time based on one additional free hour for each additional $300 in charges.

Former subscribers who spent more than $300 when they used the service will be eligible for cash reimbursement up to a total of $500,000 in payments by the company. Former subscribers who rejoin America Online will get one free hour of time.

The company also agreed to "promptly implement" improved customer disclosures about billing and cancellation policies, the lawyers said.

Pub Date: 7/06/96

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