Even as it was switching to an ad-supported model from its "walled garden" subscription approach, America Online was paying bonuses to sales reps who stopped consumers from leaving that garden, reports the New York Times. The practice apparently led to exasperated consumers who weren't allowed to cancel their service - and has now resulted in AOL's paying $1.25 million to settle with New York State attorney general (and gubernatorial candidate) Eliot Spitzer, who charged the company with giving customers a hard time.

AOL, the country's largest internet service provider, agreed to pay $1.25 million in penalties and to refund some customers' subscription fees, but admitted no wrongdoing in the settlement. It also said it would no longer tie in bonuses to thwarting cancellations. Apparently, internal AOL brochures promoted how employees could earn a bonus as high as $3,115 a month by recording 975 "saves."

AOL's customers and former customers can receive refunds for as much as four months of charges if they tried unsuccessfully to cancel their service. "This agreement helps ensure that AOL will strive to keep its customers through quality service, not stealth retention programs," AG Spitzer said in a statement, adding that his office had received 300 complaints.