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Never mind the mail: You've got a class-action lawsuit

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By ROBERT TRIGAUX

© St. Petersburg Times,
published November 28, 2001


America Online, AOL Time Warner's flagship Internet service, just boasted that it now has a whopping 32-million subscribers. That's roughly one of every nine people living in the United States.

AOL's direct mail bombardment of promotional trial disks and its catchy "You've Got Mail" must be working.

But at least a few AOL subscribers aren't happy campers. Marguerite Miles, a former New Port Richey resident, and Patty Colclasure of Kansas are two of them.

The duo sought class-action status in a lawsuit last year alleging that AOL failed to adequately disclose they would incur long-distance charges when dialing up their Internet service because the company lacked sufficient local access numbers.

In August, U.S. District Court Judge James Moody Jr. in Tampa ruled the lawsuit met legal requirements for establishing class-action certification. AOL obtained a stay and appealed.

Now a federal judge with the 11th Circuit Court of Appeal in Atlanta has denied America Online's appeal.

At the heart of the case: Did AOL lure customers with deceptive advertising?

AOL advertised a flat fee of $19.95 per month for unlimited Internet access. Instead, Miles and Colclasure ended up with mega-bills.

When Miles received a promotional trial disk from America Online two years ago, she signed on and began surfing the Internet. A month later the Florida woman received her phone bill with $300 in long-distance charges.

Colclasure's story is even better. Her 11-year-old daughter, Lilly, ran up a $3,190 long-distance telephone bill in a little over a month of using AOL.

In both cases, the new AOL users lived in areas in which AOL did not offer free, local numbers for dial-up.

Miles contends she called AOL to find out which of the three area numbers supplied by the company she should use to access the online service. One Tampa number was obviously long-distance from New Port Richey, but she was not sure about the other two. After choosing a St. Petersburg number, she and her teenage daughters began surfing the Web.

When Lilly Colclasure, who lives with her parents in Shawnee, Kan., signed up, AOL's software offered her three telephone numbers to gain access to the service. All three were toll numbers, but Lilly did not know that.

AOL says it is not responsible for such problems. AOL says it cautions subscribers to check with the local phone company and make sure the access number they have chosen is local for their calling plan and area.

AOL's position did not wash with the 11th Circuit Court of Appeal.

Hence the lawsuit's new class-action status.

Should Miles and Colclasure have checked and double-checked whether the phone numbers provided by AOL were toll calls? Absolutely.

Should AOL have done a better job of informing potential customers that its so-called $19.95 monthly flat fee service (since raised to $23.90 a month) could become a money pit from long-distance calls? No question.

For now, it looks as if AOL may have erred more than the first-time customers it solicited.

Lance Harke, a Miami attorney who brought the Miles lawsuit last year, said AOL turned over 4,700 written complaints about phone charges. Tens of thousands of AOL subscribers nationwide could have been affected.

With 32-million subscribers, AOL isn't about to panic. But it's reviewing its options.

Harke, eager to go to trial, is no legal wallflower. When a consumer found fault with Kmart's recent "Dare to Compare" in-store advertising campaign, Harke sued the discount retailer for deceptive and unfair trade practices.

When McDonald's promotional games fell prey to a $13-million prize scam this year, Harke sued the fast-food giant on behalf of a South Florida woman. The suit accuses McDonald's of using the promotional games to attract customers, yet failing to make sure those customers had a real shot at winning the prizes.

Harke also sued sports agent William "Tank" Black on behalf of Jacksonville Jaguars running back Fred Taylor and New York Giants wide receiver Ike Hilliard, claiming Black defrauded the players out of millions of dollars.

Now that Harke's AOL class-action suit survived this month's federal appeal, can a juicy settlement be far away?

AOL's track record for consumer clarity already left much to be desired. Four years ago, New York's attorney general charged AOL was confusing customers with a toll-free 800 access number that actually cost $6 an hour. Two years ago, two South Florida residents sued, alleging AOL launched an unlimited access plan while knowing that access for existing subscribers would be severely diminished.

On the other hand, Marguerite Miles is no stranger to litigation. Her former employer, Manorcare Health Services, sued her in 1998. While working as a nurse for the company, the suit claimed, Miles was accidentally overpaid more than $57,000. Due to a computer glitch, she was paid $195.90 an hour instead of expected $19.59 an hour.

Miles collected her inflated paycheck for five months before the mistake was discovered. When Miles refused to pay the money back, Manorcare sued. The case was settled with Miles, now living in Broward County, making $400 monthly payments as part of her restitution.

Nobody said litigation is pretty. But the AOL lawsuit, warts and all, might help keep one huge Internet company a bit more accountable and its customers, perhaps, a little less naive about the fine print.

- Robert Trigaux can be reached at trigaux@sptimes.com or (727) 893-8405.

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