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Class Action Against AOL Threatens AOL's Advertising Practices; Internet Access Provider's Motion to Dismiss is Denied

A class action lawsuit against America Online (Booker and Sweeney v. America Online, Inc. - (Case No. 99-5359 CA 32), may force AOL to refund millions of dollars paid by its customers over the last six years, and to dramatically revise the manner in which advertisements are placed on AOL's service.

The lawsuit alleges that AOL's advertising practices violate AOL's promise to charge its customers only for time during which customers have access to AOL's services, and seeks to force AOL to pay damages estimated to be in the range of $15 million to $20 million.

This week, Miami-Dade County Circuit Court Judge Fredricka Smith, certified as a class action a lawsuit brought on behalf of AOL's customers who have subscribed to hourly plans since 1994. Under the hourly plans, subscribers receive either three hours of access to AOL's services for $5.95 per month, or five hours for $9.95, in both cases paying an additional hourly rate for online time in excess of those fixed number of hours.

The two representative Miami plaintiffs, Hampton Booker and Arthur Sweeney, are suing AOL for charging them for time during which they and the other class members were prevented by AOL's pop-up ads from exploring the AOL service of their choice, such as Internet and e-mail. The plaintiffs contend that during the time the ads are on the screen, AOL blocks customers from having access to all of AOL's services. Only after the customer clicks through the "Tell Me More" screens, or locates and clicks the "No Thanks" button, is the block lifted, allowing the customer to take advantage of the services provided by AOL. As a result, the plaintiffs argue, hourly plan subscribers are charged for overtime they cannot avoid and do not receive the full benefit of their three or five hours per month. The plaintiffs are represented by Miami attorneys Abbey L. Kaplan, of Kluger, Peretz, Kaplan & Berlin, and Andrew V. Tramont, as well as Honey L. Kober, who successfully argued the motion for class certification.

"AOL claims that one of the reasons people subscribe to its services is for the ads. We think that's utter nonsense. People sign up for AOL because they want Internet and e-mail access. If your access is blocked, you shouldn't be charged," says Kaplan.

Tramont explained further: "AOL reaps millions and millions of dollars each year in advertising revenue because it has this captive audience of subscribers who are bombarded with these ads. For AOL to charge its subscribers for the time spent having to wade through this largely useless information, while at the same time collecting huge advertising fees, is double-dipping, and simply wrong. AOL should put its advertisements at the end of the session, and ask customers: `Do you want to look at our ads now? If so, you will be charged for the time spent doing so'. Then, those customers who aren't willing can terminate their session, and those who are can continue," says Tramont.

In addition to certifying the case as a class action, Judge Smith also denied AOL's motion to dismiss the case. AOL is expected to take an immediate appeal from both rulings.


unknown, June 23, 2000, Business Wire via NewsEdge Corp.

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