For $19.95 A Month, Unlimited Headaches For Aol

Steven C. Borsse is fed up. Last November, Borsse, who runs his own underwater search business in Sebastian, Fla., coughed up $358 for a two-year, prepaid membership on America Online Inc. Borsse uses the service to search for potential customers. But since AOL went to a monthly $19.95 flat rate in December, Borsse tries to go online sometimes 20 times a night without getting a connection. More frustrating, he can't get through to AOL's jammed customer-service center. "It's literally impossible to get on AOL at night," says Borsse. "I do business on the Internet, and this has really hurt me."

Borsse isn't alone--and now AOL's busy signal is starting to cause it legal headaches. On Jan. 14, five AOL customers filed a class action in a state court in Los Angeles alleging that the company fraudulently misrepresented its service. A day earlier, another AOL user filed a class action in New York alleging breach of contract. And a group of state attorneys general, who have probed online industry billing practices for months, are now scrutinizing the latest AOL snafu. State officials won't comment on specific inquiries. But warns Thomas F. Pursell, senior counsel for the Minnesota Attorney General: "If somebody advertises a service and charges for it, but people can't use it, it's a potential legal issue."