FTC Proposes Settlement of Unfair Practice Charges with AOL, CompuServe

On September 23, the Federal Trade Commission (FTC) published a proposed consent order settling complaints with AOL and its subsidiary, CompuServe. The FTC had alleged that AOL's procedures for handling customer cancellation requests and AOL and CompuServe's handling of a recent "CompuServe $400 Rebate Plan" were flawed in that: (1) some customers who had requested cancellation of service had continued to be billed for monthly service, and (2) AOL and CompuServe had failed to deliver promised $400 rebate checks toward consumers' purchase of a computer after the consumer contracted for three years of CompuServe Internet Service. The proposed settlement requires better procedures by AOL and CompuServe in both areas. First, the proposed order requires AOL to adopt measures to ensure that once a customer has requested cancellation of service, AOL will promptly stop billing the customer. The order also requires that AOL send confirmation notices and obtain explicit informed consent from any customer who, having called AOL to cancel service, is convinced by an AOL representative not to do so. Upon receiving the confirmation notice, customers who do not wish to continue their AOL service would be able to mail or fax back an enclosed cancellation form.

Second, the proposed order requires that, in future rebate offerings, AOL and CompuServe provide rebate checks within their promised time period. The order also addresses the FTC's claims that AOL and CompuServe could not demonstrate any reasonable basis for their promised delivery time frame of 8-10 weeks. In future rebate promotions, AOL and CompuServe would be required to have a reasonable basis for their claims of rebate checks' delivery time frame.

The FTC has published the proposed agreement for public comment until October 23, 2003, after which the Commission will determine whether to make it final. To read the agreement and make comments, visit http://www.ftc.gov/opa/2003/09/aol.htm.

. Proposed Agreement Containing Consent Order, In the Matter of Am. Online, Inc., and Compuserve Interactive Servs., Inc., at http://www.ftc.gov/os/2003/09/aolconagreement.pdf (Sep. 23, 2003).

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