AOL has settled with 48 states and the District of Columbia over an investigation stemming from its previous cancellation policies in which some customers were unable to close their AOL accounts, or found themselves being billed for services after thinking they had canceled.

AOL will pay $3 million and has agreed to continue maintaining its online cancelation feature that went live last August; previously, customers had to call in to cancel, and AOL employees were encouraged to convince them otherwise. The company admitted no wrong-doing as part of the settlement.

California led the multi-state investigation, which would have led to a lawsuit had AOL not agreed to settle. New York and Florida were the only states not to participate in the action. In 2005, AOL paid $1.3 million to settle a similar complaint in New York.


But AOL customers won't see any of the settlement money; the $3 million will be split among the 48 states and District of Columbia to cover the cost of the inquiry and other consumer protection efforts. AOL will, however, refund any customers that it charged after they attempted to cancel their accounts.

For its part, AOL says it already revamped its cancellation policies in 2005 and 2006 after a deluge of high profile complaints. In one case, a customer recorded an AOL representative who simply refused to cancel his account. Employees were reportedly paid bonuses up to $3,000 if they convinced a customer to keep the AOL service.