David Cassel (destiny@wco.com)
Mon, 11 Aug 1997 00:11:59 -0700 (PDT)
S u s p i c i o n s
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After the stock market closed Thursday, AOL dropped the bombshell:
profits reported for the third quarter never happened.
Bonuses AOL reported from a deal with Tel-Save should've been spread over
40 months, the SEC ruled -- boosting AOL's bottom line just $175,000 per
month. Instead, AOL used the full amount -- $7 million -- to create
positive third-quarter figures. Thursday's press release tells the actual
result: "the company lost $4.7 million, or $0.05 per share, for the third
quarter." ( http://biz.yahoo.com/bw/97/08/07/aol_fnm_x_1.html ) In
addition, the Securities Exchange Commission ruled that a $25.7 million
debit from the second quarter also belonged in the fourth quarter.
"Including the timing adjustments, AOL reported a fiscal fourth quarter
loss of $11.8 million, or $0.12 per share, compared to fiscal 1996 fourth
quarter income of $16.1 million, or $0.14 per share."
AOL's press release boasted that, minus those charges, they would have at
least shown a $10.9 million profit -- operating expenses apparently
gobbling 98 cents of every dollar earned. But attrition may be affecting
the service. AOL reported slower growth in subscribers than the same
3-month period last year -- when their service cost $3.00 an hour --
despite the fact that AOL spent 45% more on marketing.
The exorbitant increase belies Steve Case's claim AOL marketed "on a
limited basis, slowly ramping up over time." "The priority will always be
improving service to our existing members and ensuring their
satisfaction," Case wrote in April. (In August, he concedes that "we
realize that some of you still are encountering busy signals...") Despite
expenditures to build up its network AOL "still holds the worst access
record among top Internet service providers," C|Net noted.
( http://www.news.com/News/Item/0,4,13174,00.html )
But more problems lurked. AOL sent a "clarifying" memo about their
telemarketing plans to the Multi-state Attorney General Task Force -- and
gave a copy to the Electronic Privacy Information Center. Two weeks
later, Interactive Week discovered even graver concerns: AOL is compiling
databases of member movements through service. "The problem is it's being
collected and maintained," the organization told the magazine.
( http://www4.zdnet.com/intweek/daily/970808g.html )
Noting that AOL's apology applied only to telemarketing, the group's
general counsel pointed to Section 5.C. of the proposed TOS changes,
which allowed AOL to "collect and store certain navigational and
transactional information." It could also foreshadow privacy violations
to come -- another section added that AOL "may use such information as
criteria for developing Member lists for companies with which AOL, Inc.
has a contractual marketing and on-line relationship."
"I believe that interpretation to be rather apparent," EPIC's legal
counsel told AOL. Yet two weeks later, AOL hadn't answered his letter.
http://www.epic.org/privacy/consumer/aol_ltr_7_25_97.html
Observers told Interactive Week AOL would issue a new Terms of Service
agreement this week. One Earthlink user is cynical. His web page vents
his thoughts in the form of a riddle: How can you tell when Steve Case is
lying? "His lips are moving"
http://home.earthlink.net/~jeffh99708/aolsucks/lie.html
Members even question AOL's current telemarketing practices. In one
instance, the 17- year-old son of an AOL account holder was given the
decision to make a purchase
( http://members.tripod.com/~Wakanlady/voice.htm ) -- and some
telemarketers have claimed that a book is already on the way, with no way
to stop it. Even his latest letter, where Steve Case vowed to "redouble
our efforts to communicate to you," was inaccessible to many users due to
a technical glitch. "I got punted by General Protection Faults each time
I tried to access it," one user complained!
But new issues are more serious. "AOL stands to make a lot of money," one
Community Leader calculated, "and it's member stand to get more spam and
invasion of privacy." Users are angry. The Earthlink subscriber's page
displayed instructions for contacting the Better Business Bureau
( http://home.earthlink.net/~jeffh99708/aolsucks/complaint.html ) -- and
one reader likes to re-visit the site's interactive photo. "I always beat
up Steve Case each night before retiring," they told the AOL List, "It
helps me to sleep." (http://home.earthlink.net/~jeffh99708/aolsucks/beat1.html)
Users have started retaliating over AOL's new gaming prices. Saying AOL
has a history of "poor billing practices and false advertising,"
subscribers created the "Voice of the Resistance" newsletter -- which now
has 1300 subscribers. They're organizing opposition, like "planning an
AOL March at the headquarters in Dulles, VA."
( http://members.tripod.com/~Wakanlady/boycott.htm ) "We are trying to
gather everyone from Maryland, Virginia, Pennsylvania, West Virginia, and
Delaware or other states..."
They're also urging a boycott on AOL's Marketplace. One user cancelled
$459 worth of purchases -- and AOL's partners are noticing. "Shoppers
Advantage told me they had received a number of cancellations due to the
boycott," another web page observed.
( http://members.aol.com/unamoureux/boycott.html ) Protests didn't stop
there. "We are sending e-mails to different manufacturers and telling
them we will boycott their products if they continue to advertise on AOL."
( http://www.geocities.com/SiliconValley/Bay/8406/boycott.html ) One
Boston restauranteur even created a boycott omelet
( http://members.tripod.com/~Wakanlady/voice.htm )
"Do not suffer in silence," the "No Pay to Play" page urges. "Make your
voice be heard." ( http://members.aol.com/jhughes413/index.html ) That
effort is succeeding. HotWired's Assistant Editor scheduled a chat on
their web-based chat service, Talk.Com.
( http://members.tripod.com/~Wakanlady/boycott.htm ) -- and the protesters
even contacted Howard Stern (as well as the FTC). "To all the people
affected by the premium pricing, keep up the fight!" the "Voice of
Resistance" told the AOL List -- (adding "For subscriptions...we're asking
people to e-mail me, Beatle909@aol.com.") Meanwhile, their readers created
numerous sites publicizing their protests.
http://members.aol.com/netmasterr/index.html
http://members.tripod.com/~Wakanlady/casinopoker.htm
http://members.aol.com/jhughes413/index.html
http://members.aol.com/unamoureux/boycott.html
http://www.geocities.com/SiliconValley/Bay/8406/boycott.html
http://members.aol.com:/cavalri/boycott.htm
The last site even offers sound files mocking AOL's professed concern for
their members ( http://members.aol.com:/kavalov/famouswords.wav ) plus a
lengthy diatribe capturing their feelings toward Steve Case.
( http://members.aol.com:/kavalov/stevecase.wav ) "I don't recall seeing
an asterisk next to 'unlimited AOL' when I signed up for AOL in February,"
another page commented. ( http://members.aol.com/unamoureux/boycott.html )
"Send a note to each customer service department indicating your
intentions to boycott them," it urged.
To further their cause, they've even compiled dazzling lists of free game
sites
http://members.aol.com/jhughes413/gamesite.html,
http://members.aol.com/rjdrivers/gamesite.htm
http://www.concentric.net/~abidabi/games/games.htm
http://members.aol.com:/kavalov/linkspage1.htm
But the "Voice of Resistance" uncovered further AOL scandals.
"Information coming from Sierra is that AOL is holding up the mail from
Sierra to AOL," they wrote, "not allowing the passwords to get through."
Passwords would allow users to access Sierra's games on the web. They're
not the only ones. "It has recently come to our attention that since the
last part of July, AOL, without our knowledge, has been deleting all
e-mail from Simutronics addresses to AOL addresses," an announcement in
Simutronics' Gemstone III area announced.
The implications are ominous. "Simutronics and America Online are
discussing the ethical and legal ramifications of this move," the
announcement continued. Meanwhile, the "Voice of Resistance" notes that
users can by-pass AOL's mail blocks, as well as ongoing delivery problems,
by using free web services such as HotMail to receive e-mail.
(http://www.hotmail.com) Last week AOL also blocked mail from Angelfire
-- a competing service offering free web pages. "AOL has been blocking
e-mail sent to Angelfire for the last six days," one user told the AOL
List.
AOL failed even to acknowledge their complaints. "We will let you know
when they decide your relationship with them is important enough that they
at least contact us," Angelfire told users. "This problem has existed
for six days," their site announced. "It has been four days since they
have been notified about it. It should only take them one minute to fix
it." AOL remained unresponsive. "We have not been able to get past their
'front-line' personnel on four occasions, who have said they would 'file a
troubleshooting report' and said that we 'would be contacted'."
AOL's unresponsiveness may get them into trouble. "It has come to our
attention that AOL is not making its do-not-call policy available upon
demand," Private Citizen reports. "If this is true, it is a violation of
federal law." ( http://207.222.198.208/news.htm ) They cite FCC
regulations specifically stating that "Persons or entities making
telephone solicitations must have a written policy, available upon demand,
for maintaining a do-not-call list." Further down, their page offers
information about Private Citizen's book -- "So, you want to sue a
telemarketer..."
Meanwhile, state attorneys general continue to receive complaints about
AOL's trial subscriptions, Communications Daily reports.
In an on-line summit, a worried L. J. Schick, Executive Director of
Interactive Entertainment Programming, conceded to gamers that they were
testing flat-rate game access for an additional fee, saying the rate would
be determined by "what the market will bear." He pointed out the problem
with banner advertising on AOL: "it just doesn't bring in very much money
yet." Critics reminded him that AOL is even charging for games which
haven't left beta...
Others claim AOL is playing the shell game. AOL announced they wouldn't
charge $2.00 an hour for "Air Warrior". Instead, the game will be
replaced by a $2.00-an-hour game called Air Warrior II -- and the original
Air Warrior "will be phased out sometime around the end of the summer,"
according to Schick. "It has very few things that the original Air
Warrior does not," one web page observed. The intention were clear:
"AOL is shooting down Air Warrior."
( http://members.aol.com/Schnicker1/private/Airwarrior.html ) Another
notes that "There are over 1000 pilots that fly in Air Warrior," adding
"It would be a shame to lose it because of greediness"
( http://members.aol.com/AcidCooL49/complain.html )
Fans are outraged. "I will not only stop playing Air Warrior but I will
drop AOL all together," another wrote, "and I know I'm not alone."
( http://www.geocities.com/TimesSquare/Lair/4787/index.html ) One page
complained that "This is an obvious case of bait and switch sales
tactics." They're also fighting back. "I have contacted the Attorney
General's office in my state, and will do everything in my power to let
the world know about this totally dishonest policy."
( http://members.aol.com/JEuba98775/aol.html )
The game is "definitely not worth the $2 an hour they want to charge us,"
another page states, adding "It is pretty obvious AOL does not care about
its members.... All that matters to them is that now they can charge us
to play." ( http://members.aol.com/AxlRose29/protest.html ) Yet another
page reveals the area's dirty secret: "It is pretty much common knowledge
that Air Warrior II does not run all that great on AOL."
( http://www.geocities.com/Area51/Corridor/9611/8th.html )
One user compiled a 250-kilobyte file of comments from over 250 gamers.
( http://members.aol.com/netmasterr/Airwarguestbook.html ) Many more have
created protest pages.
http://members.aol.com/AcidCooL49/complain.html
http://members.aol.com/JEuba98775/aol.html#=\AOD/=
http://members.aol.com/Schnicker1/private/Airwarrior.html
http://members.aol.com/AxlRose29/protest.html
http://www.geocities.com/TimesSquare/Lair/4786/index.html
http://www.geocities.com/TimesSquare/Lair/4787/index.html
http://members.aol.com/RacquetX/AKMAN.html
http://www.geocities.com/TimesSquare/Lair/4784/links.html
http://www.geocities.com/Area51/Corridor/9611/8th.html
But their protests may fall on deaf ears. In his member profile, L.J.
Schick offers the following quote: "I have been too lenient."
"They may think that we have rolled over and accepted our fate," one gamer
told the AOL List, "but a lot of us are leaving." Earthlink will waive
one month's $20 fee ( http://www.earthlink.net/company/pr_gamers.html )
for gamers who spend 35 hours using their $1.75-an-hour "Arena" games
-- and CompuServe is considering flat-rate pricing.
( http://cnnfn.com/digitaljam/9707/21/compuserve/ ) In addition,
CompuServe will offer free web-based access to their forums in December
( http://www4.zdnet.com/intweek/daily/970804a.html ) -- and they've
already won raves about the reliability of their dial-up lines.
( http://www.news.com/News/Item/0,4,10151,00.html ) One user notes that
since Simutronics moved to the web, the game performs better -- and
company calculations suggest they're now the single largest gaming site on
the web. ( http://biz.yahoo.com/bw/97/08/04/y0007_y00_42.html ) The "Voice
of Resistance" told the AOL List that Simutronics "left AOL because of
it's ridiculous new premium games plan and took almost 10,000 users with
it." ( http://www.gamecenter.com/News/Item/0,3,991,00.html ) Ironically,
Simutronic's "Gemstone III" is listed as the winner of AOL's "Members'
Choice" Award. ( http://www.play.net/simunet_public/gs3/gs3home.asp )
AOL may have received poetic justice. Out of every 8,000 AOL subscribers,
one has received a copy of a petition -- over one thousand names -- titled
"LET'S FIGHT BACK." The 10-line statement claims knowledge of "a move that
is expected to be publicly announced in the next couple of weeks" -- that
AOL "is going to start charging $1.95 per hour to use chat rooms." One
copy fills nearly 50 kilobytes, requesting its recipients to "forward this
message to as many people as you know."
On July 9 Steve Case officially denied the price increase. Citing
"confusing and inaccurate rumors" he wrote that AOL "remains committed
to" flat-rate pricing. "We want to assure our members that these rumors
are not true."
But just three weeks after Case's warning letter, the 1000-member petition
started circulating -- and suspicion lingers, even among AOL's own staff.
"That letter has been pulled from the year's worth of community updates at
Keyword LETTER," one staffer told the AOL List, "and no one in-house will
now confirm or deny that chat will remain free."
One group of gamers remains unconcerned: the password-fishers using other
peoples' accounts after successfully conning them out of their passwords!
"50-100% of the players are fishers in some areas," one user reported.
The problems have gotten so bad, the editor of Games Channel News (keyword
GCVoice) devoted Friday's issue to a thousand-word advisory. Saying
they'd received "yet another password sniffer" via e-mail, he warned
users that "When a hacker gets your password or personal information you
are essentially at his mercy....leaving you holding the bag if he does
something illegal, runs up charges in a premium area...." On-line
identities enter the Twilight Zone. "You will not even be able to sign
onto AOL if he is using your account at the same time you want to sign
on."
But the editor reported other problems. "Hackers have been known to forge
TOS-violating Instant Messages using the return Instant Message you
sent, and then sending the forgery in to be actioned by the Community
Action Team." He didn't explain why this simple trick would fool AOL's
Community Action Team -- though others report that AOL bases actions
solely on the number of complaints received. "There is nothing in place
to separate a faked report from an actual one," one staffer wrote on an
in-house bulletin board. "Action is taken based on the number of
reports." Knowing this, hackers developed tools to facilitate wrongful
account terminations. "[S]ome of the 'add-ons' used to do this allow for
signing on and off again using numerous fished accounts to generate enough
reports to get the faked ones actioned," the staffer reports.
"Hackers have more power than we do," another staffer complained to the
Manager of the Community Leader Organization. As password-fishing hackers
descended on the manager's on-line meeting with AOL's Community Leaders,
they joked "Why bother reporting it?"
New tools allow trouble-makers to send "toxic" Instant Messages to anyone
using a PC. ( http://members.tripod.com/~greedyfly12/aol.html ) "It
sends over 1000 lines of text into an instant message *immediately*,"
another staffer confided to the AOL List. "Between the time you get the
Instant Message and you GPF off-line, it is literally 2 seconds." One
hacker web page gloated that "This problem has become so extreme that
guides are having problems staying on-line," adding "even TOS accounts are
being punted often." ( http://www.aol-inside.com/news/punt.htm ) Some
users reported the attacks damaged their hard drives.
It's a PR nightmare. "The bigger of the two computer shops in Fallon are
urging the customers to NOT use AOL," one staffer posted, "because of
possible damage to their hard drives." AOL's Community Leaders pleaded
with AOL's management to address the problem. "At the computer show
dealers were advising folks to NEVER use AOL because of the damaging IM
bombs," one complained on an in-house bulletin board. "At the Best Buy in
Oklahoma City the computer people are telling customers that AOL will
cause permanent and irreparable damage to hard drives and modems..."
"When a customer told the sales rep his modem 'just died' and the sales
rep said, "Do you use AOL?" and the guy said, "Yes"....he said AOL has
lost control of the hackers who use programs that will ruin your hard
drive and modem and that there are so many of these hackers out there,
they can no longer control the problem."
His warning was stern. "He said it was common knowledge that using AOL in
a chat area will ruin your hard drive/modem and suggested the guy try
another on-line service."
"According to Steve Case, AOL is doing all it can to protect the
membership while they are on-line," another staffer complained. "Yet,
according to what I see here, the reverse is actually happening." "AOL
does nada," one Guide told the AOL List -- saying they were hit with two
Instant Message bombs in a single hour. "These are EPIDEMIC on-line,"
another Guide added. "They target HOST and GUIDE and RANGER names...to
the extent where we have been instructed to Guide with our Instant
Messages OFF." Members are angry too. "AOL has created a monster," the
staffer reports, saying AOL originally advised them to block all instant
messages as a defense. On Community Leader bulletin boards, a Guide wrote
that one night he received reports of attack from four different areas of
AOL. "They were each hit with an instant message bomb, knocked off-line --
came back on-line, it happened again."
AOL provided staffers with an implausible response: "the problem resides
on the computers of those who receive the Instant Messages." They blamed
the finite memory capacity of PC's. "When enough of these IMs are
received, it overloads the receiving computer system and results in a
GPF."
"It doesn't matter *how* much memory you have," Community Leaders
complained. "8 megs or 128, it will still get you. It just takes a few
nanoseconds longer."
"Maybe they'll change tactics and start blaming our monitors."
"What a bunch of inept morons...."
One Guide reports a subscriber who'd been targeted by an attacker asking,
"Why doesn't AOL just cancel his account for possible damage to people's
computers?"
"I don't have an answer to that," the Guide responded. Later, on the
in-house bulletin board, they commented, "If only [the user] really knew
how AOL thought."
To protect themselves from being bumped off-line, Guides used the feature
of AOL's software which blocks the receipt of all Instant Messages. They
could still communicate with other Guides, because Guide accounts had the
ability to override the blocks. But last week the organizers of AOL's
Community Leaders program announced plans to eliminate the override features
for Community Leaders (citing "the rise in compromised accounts" --
implying the tool had fallen into the wrong hands.)
As AOL solicits more billing information from their volunteers, some now
fear for their own privacy. "What type of security guarantee can we have
that our personal information is safe, with a recently discovered web page
that has published the entire Virtual Leaders Academy cadre personal info
(name, address, phone) plus other AOL officials," one asked the manager of
the Community Leader Organization. "I would consider safety a perk of
sorts." Another was blunt: if the positions were reversed, "would you
consider giving your personal information to AOL...? Or like most of us
think that some hacker would be scrolling it on a chat room three days
later?"
"I would like a guarantee you can provide security with my information," a
third staffer agreed. "I don't want stalkers showing up at my front door."
The manager promised to create an information sheet about security. That
was mid-July -- and one staffer reports that it hasn't arrived yet. "Berl
did post a document about disaster preparedness for floods, tornados and
other stuff like that," the staffer observed. "Nothing to do
with AOL -- just something he had from his days at the Red Cross."
Some Community Leaders now openly mock Steve Case's August update, which
claims one of AOL's "top priorities is making the on-line environment as
safe as possible for our members." One notes that AOL's efforts to
eliminate the entrenched sub-population using credit card numbers has
resulted in more aggressive attempts to steal other members' passwords.
Newsday wrote that Trojan horses were "especially common on AOL," and
security chief Tatiana Gau told the paper the problem was so bad, the FBI
has launched an investigation. There are signs of despair among Community
Leaders. "How much humiliation will we stand for?" one complained on-line.
"How many times will we be abused by hackers/wackers, etc before we say
ENOUGH!" One Community Leader posted a satirical "Memo From Management":
"Due to the current fiscal crisis...the light at the end of the tunnel has
been turned off to save money. We do not know when or even if it will be
turned on again. Thank you for your time."
Users may be despairing as well. "Why, oh, why does 'abuse@aol.com'
ALWAYS have a full mail box???" one asked the AOL List. Taking matters
into their own hands, subscribers have resorted to their wits
( http://www.wco.com/~destiny/hackturn.htm ) to at least turn the tables
on password-fishers. One Community Leader criticized "the caring facade
presented by those in charge," as only token efforts are made to address
their concerns. "The Community Leaders Organization staff finally posted
a Mission Statement, all 2 lines of it," another staffer observed, "and it
had spelling errors."
But another staffer claimed the errors had a purpose. "That's how we know
it's official."
THE LAST LAUGH
AOL's reputation for busy signals clings to the service. Jay Leno
recently speculated AOL was offering 50 free hours of time on the service
"because it takes 49 to get on!"
Now AOL's service problems are overlapping. One subscriber asked a "Tech
Live" support staffer when more local dial-up phone lines would be
installed.
"I wish I could see a list of future cities and dates," the staffer
answered, "but the only place I can access that has that information is
down!"
David Cassel
More Information -
http://www.wco.com/~destiny/time.htm
http://www.msnbc.com/news/92258.asp
http://www.aol-inside.com
http://www.geocities.com/Pentagon/3130/trojanrumor.html
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