AOL to Reform Customer Service in Spitzer Pact

America Online, the world's largest Internet service provider, has agreed to reform the way it handles customers who want to cancel service, New York State Attorney General Eliot Spitzer said on Wednesday.

Spitzer, announcing settlement of a lawsuit, said AOL is also required to provide fee refunds for up to four months of service to all New York consumers who claim harm based on improper cancellation requests and pay New York state $1.25 million in penalties and costs.

Spitzer's office, responding to about 300 New York customer complaints, conducted a probe into AOL's customer service policies and procedures. AOL, owned by media conglomerate Time Warner Inc., serves about 21 million subscribers, of which 1.9 million customers reside in the region.

With the settlement, AOL agreed to alter incentives it offers customer representatives who try to dissuade customers from canceling their subscriptions.

It also agreed to eliminate customer service quotas on the number of subscribers dissuaded from canceling and to record all cancellation requests. Cancellation requests will need to be verified by a third party monitor by June 2006.

Customers seeking refunds will need to submit claims to either AOL or the attorney general's office within 120 days.

"AOL is pleased to have reached an agreement with the state of New York on customer care practices that we believe will increase quality assurance and assist with the verification of certain member intentions online," an AOL spokesman said.

Copyright 2005 Reuters Limited.

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