In an action that could prompt similar settlements in other states, Washington State Attorney General Christine Gregoire on Friday signed a "letter of agreement" with AOL to resolve the company's controversial switch to flat-rate pricing.
Attorneys general in 17 states have been investigating AOL's marketing practices because of the company's recent announcement that it would switch all of its customers to a US$19.95 rate for unlimited Internet access. AOL claims the new pricing will allow it to fend off a rash of new flat-rate ISPs burning up the competitive landscape. Because AOL customers would have to notify AOL in order to stick to their current limited Internet access plan of $9.95, the attorneys general fear AOL has essentially enacted a "negative option" scheme, which violates many state consumer protection laws.
The Washington agreement requires AOL to notify customers of the switch with a "pop-up" screen that will begin appearing by Monday. Customers will then have until 31 March to decide whether they want the higher flat rate. Those who don't log on by the 1 December activation date for AOL's new flat rate will be credited retroactively, according to the agreement.
"By burying the information and then assuming that the customer's silence meant agreement to the change, AOL had effectively taken the decision out of the customer's hands," Gregoire said.
