America Online on Wednesday reached a $3 million settlement with 48 states and the District of Columbia after customers complained AOL failed to disclose terms and conditions of paid service and made it difficult to cancel subscriptions.

AOL voluntarily agreed to make it easier for customers to cancel subscriptions to its services, improve billing disclosure policies, refund unauthorized charges, record cancellation calls, and require customer authorization for all payments, said California Attorney General Jerry Brown, who served on an executive committee that negotiated with AOL.

AOL originally offered dial-up Internet access through free trials that required cancellation -- via fax, mail, or telephone -- to avoid monthly membership fees. Most customers called AOL directly and spoke with customer service representatives who earned up to $3,000 a month for persuading customers not to cancel, Brown's office explained in a prepared statement. In August 2006, AOL announced that it would limit is Internet access services and allow customers to switch to free AOL e-mail accounts.

Consumers complained that the service representatives' tactics for "saving customers" made it extremely difficult, if not impossible, to cancel monthly memberships. Those practices ended with the settlement, Brown's office said.

"Wednesday's agreement will minimize the potential for consumer confusion during the transition to free e-mail accounts," Brown said.

Now, customers can easily cancel service online and AOL must provide a proper mailing address, fax number, and e-mail address where consumer complaints may be forwarded.

The agreement requires AOL to provide refunds to customers who can prove unauthorized charges after a cancellation attempt. Brown's office encouraged consumers who believe they have been charged by AOL for unauthorized service to visit his Web site.

It also requires AOL to provide detailed explanations of the exact cost of its service charges, which appear on customers' phone bills, as well as the exact cost of "spin-off" memberships.

New York and Florida were the only states not to participate in the settlement. The settlement is an addition, not a replacement, for various earlier agreements with several states (including New York and Florida).