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AOL Desperation Results in $1.2M Fine

According to the New York State Attorney General, AOL's policy to discourage dial-up customers from disconnecting service resulted in bad judgement -- Every company wants to retain customers. But AOL Inc. went too far when it tied employee compensation to minimum �save� percentages. So says New York State Attorney General Eliot Spitzer, who this week announced a $1.25 million settlement with the online giant. The deal resolves a probe into complaints that AOL�s telereps failed to honor cancellation requests. The payment, covering $1.2 million in penalties and $50,000 in investigative costs, is the least of it: The company will also have to restructure its bonus plan. And it will have to implement third-party verification of member�s consent to continue services. Finally, it must repay New York customers for up to four months of improper post-cancellation charges. How did AOL get into this mess? AOL�s retention program has long been based on persuading people who call to cancel into staying. That entails finding the �sweet spot� that will appeal to individual subscribers, and is similar to others in the online industry, says spokesperson Nicholas Graham.

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