RealNetworks to refund customers in online subscription dispute

Thu May 24, 2012 3:52pm EDT

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(Reuters) - Online media company RealNetworks said it will set up a $2 million compensation fund for some of its subscribers to settle a complaint filed by Washington state prosecutors over its e-commerce practices.

The company, known for its Real media player and Rhapsody music streaming service, was being investigated by the Washington State Attorney General for allegedly charging customers for services they did not subscribe to.

"Deceptive pre-checked boxes and fine print obligated consumers to not-so-free trials for subscription services they didn't want in the first place," said Washington State Attorney General Rob McKenna.

RealNetworks will also pay $400,000 for legal costs to the Attorney General's office.

"While we disagree with the complaint filed by the Washington Attorney General, we acknowledge that some aspects of RealNetworks' e-commerce practices were not what our customers expected of us," CEO Thomas Nielsen said in a statement.

The company said the settlement relates to subscriptions between January 1, 2007 and December 31, 2009.

"The practices at the heart of the issue were discontinued years ago, prior to the commencement of this matter," Nielsen said.

RealNetworks, an early dot-com era business, was one of the first Internet-based destinations for videos and music. Its shares were trading at $8.58, down marginally, on Thursday on the Nasdaq.

(Reporting by Himank Sharma in Bangalore; Editing by Viraj Nair)

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