Aol Deal Triggers New Logjam Customers Seeking Refunds Face Clogged Phone Lines

Frustrations among America Online customers intensified Thursday despite the company’s pledge to reimburse them for their troubles getting on line.

A day after AOL reached a multistate agreement to give millions of dollars worth of credits and refunds to customers, the company had not yet updated its toll-free phone number for handling requests. People calling the number got a maze of recorded options. None mentioned a refund.

The toll-free number finally was updated by Thursday afternoon to include a prompt for getting refunds. America Online said through a spokeswoman that it took time to gear up because the settlement was negotiated in less than a week.

“Everything happened really quickly. We did our best to get it in on time,” said Wendy Goldberg, a spokeswoman for the Dulles, Va., company.

Still, some customers ironically encountered the same problem they were trying to get compensated for - clogged phone lines.

A customer service representative answering AOL’s phone line Thursday afternoon said it would take at least 30 minutes before someone could handle a refund request because of a flood of phone calls from customers. Instead, he urged the request be put in writing.

“I got put on hold for over an hour and a half,” said Jack Simpson, an America Online customer in southeast Florida. “It seemed like every 30 seconds they said, ‘We’re sorry, the lines will be busy.”’

The trouble that prompted the refund agreement began in December, when AOL began offering customers a flat-rate price for unlimited on-line time. But the price plan created overwhelming on-line demand that clogged AOL’s lines. Customers trying to log on frequently got busy signals.

The agreement allows those of the company’s 8 million customers with trouble logging on in December and January to request a refund of up to about $40, or about two months’ on-line fees.

America Online would not estimate how many customers are expected to qualify for refunds. But because the refund is calculated by the number of hours spent on line, several industry analysts said only a small percentage is expected to quality for a full reimbursement and that total cost to AOL shouldn’t be more than $20 million.

Concerned about the latest bout of phone-line congestion, attorneys general involved in the multistate settlement planned to issue a statement urging people to write the company.

Despite the concern, consumer protection officials reiterated their praise for the company’s willingness to compensate disgruntled customers.

Jack Norris, chief of special prosecutions for the Florida attorney general’s office, said AOL’s delay in accommodating refund requests was understandable given that negotiations over the deal began just last Wednesday. One day later, New York’s attorney general Dennis Vacco threatened to sue within five business days unless AOL devised a plan to compensate customers. That created pressure for AOL to sign the deal quickly.

“I think they have done a reasonable time to accommodate this,” Norris said.

Under the deal, the company can’t advertise its service in February, diminishing the flow of new customers. In addition, AOL is spending $350 million to upgrade its network, including buying new modems, building a new data center to house computer equipment and adding more customer support representatives.

Some consumer protection officials, though, privately expressed skepticism about AOL’s ability to fix the bottlenecks anytime soon.

For some customers, the promise of refunds was not enough.

Veronica Skelton, an AOL customer who runs a San Francisco public relations firm, says she still is encountering up to half-hour delays in sending e-mail to clients and was considering switching to another service.

She doesn’t expect to get a refund because her on-line time exceeds the maximum established in the settlement.

America Online does “seem like they are working around the clock to fix the problem, but in the meantime I’ve got to fix my problem,” Skelton said.

Meanwhile, CompuServe and Microsoft Network, the two largest online services after America Online, said they experienced a recent surge in new customers, partly the result of AOL’s problems.