America Online has reached a proposed class action settlement with plaintiffs in Illinois state court that could see the company pay out cash compensation to consumers of up to $25 million, the parties involved announced Friday.
As in other suits that were earlier settled, the new settlement covers plaintiffs' claims that AOL wrongfully billed consumers for online services and products without first receiving consumers' consent or authorization. It also covers claims that AOL and its customer representatives wrongfully billed consumers for accounts, services, and goods after the consumers had tried to cancel the account or service or endeavored to return the unordered product. The unwanted services include AOL Credit Alert and merchandise such as AOL Desk Planners, according to the proposed settlement.
ICT Group, a provider of outsourced customer management services, was also named as a defendant in the class action lawsuit alongside AOL.
"The settlement announced today consolidates and resolves a series of cases that have been pending for several years," Nicholas Graham, an AOL spokesperson, says via e-mail. "AOL denies the allegations contained in the original lawsuit, and we've defended the cases accordingly," he says. ICT has also denied any wrongdoing, according to court documents.
The proposed settlement has yet to receive court approval. Judge Michael O'Malley is due to hold a hearing in the Circuit Court, Twentieth Judicial Circuit, St. Clair County, Illinois, on February 22 to determine approval of the settlement.
Customer Compensation
Under the proposed settlement, there will be three tiers of settlement compensation depending on whether consumers are able to submit documentation showing that they incurred unauthorized charges and whether they complained to AOL at the time the charges were levied. Cash payments or AOL account credits range between $25 and $80 per consumer. Plaintiffs can alternatively opt for free AOL accounts for periods of three to six months depending on the tier of compensation. AOL also agreed to forgive any amounts owed for unauthorized charges.
"AOL goes to great lengths to provide high-quality, best-in-class customer service--taking extraordinary efforts to prevent, address, and resolve billing issues," Graham says. "Consistent with that approach, the settlement allows any consumer with an outstanding issue the opportunity to obtain a potential full refund."
Should the settlement be approved by the court, AOL has agreed to maintain procedures to ensure that it first obtains AOL members' authorization before disclosing their account information to third parties and before placing any charges against members' accounts. AOL must also "clearly and conspicuously disclose all material payment terms and offers made," according to the proposed settlement.
The Internet service provider also agreed to donate to one or more charitable organizations AOL services with a retail value of $1 million. Additionally, AOL is to pay some legal and administrative costs.
More information on the proposed class action settlement can be found online.
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