A large element of AOL’s business relates to the provision of a dial-up internet connection facility – a service that is being hit hard by a consumer drift towards broadband connections.
AOL works hard to retain its customers, but the New York Attorney General’s office began an investigation into the ISP’s customer service policies after receiving around 300 complaints from New York subscribers that the company had ignored their demands to cancel the service and stop billing.
According to Spitzer’s office, the investigation revealed that the company had an elaborate system for rewarding employees who purported to retain or "save" subscribers who had called to cancel their internet service. In many instances, such retention was done against subscribers’ wishes, or without their consent.
Under the system, said the Attorney General’s office, consumer service personnel received bonuses worth tens of thousands of dollars if they could successfully dissuade or "save" half of the people who called to cancel service. In addition, for several years, AOL had instituted minimum retention or "save" percentages, which consumer representatives were expected to meet.
These bonuses, and the minimum "save" rates accompanying them, had the effect of employees not honouring cancellations, or otherwise making cancellation unduly difficult for consumers.
Under the agreement, announced yesterday, AOL does not admit to any wrongdoing. However it has agreed to reform its customer service procedures by altering the incentives it offers to customer representatives who seek to persuade subscribers not to cancel their service.
In particular, the ISP will remove any requirement that its representatives maintain a minimum number of “saves” in order to earn a bonus. It will also record all service cancellation requests.
Action on the requests will be verified through a third-party monitor.
In addition, AOL will refund all New York consumers who claim that they have been affected by the previous cancellation practice, up to four months worth of service, and it will pay $1.25 million to the state in penalties and costs.
"This agreement helps ensure that AOL will strive to keep its customers through quality service, not stealth retention programs," said Spitzer.