CompuServe or CompuScam
An ISP Plagued by Incompetence
by Mark Liberator (e-mail: [Updated April 24th, 2005]

     When we think of the computer network industry many of us do not associate it with CompuServe. It was not always this way. CompuServe used to be a pioneer in the industry. This article will detail recent events that suggest CompuServe has lost its competitive edge and place among quality Internet service providers.


  • Brief History
  • Faulty Rebate Program
  • Mismanaged Forums
  • Overuse of Subcontractors
  • Poor Customer Service Department
  • Summary
  • Many Resources and Avenues for Further Study

    Brief History
         CompuServe was founded in 1969 by Jeffrey Wilkins. It was the first service to offer e-mail communication in 1979. One year later it the first online service to offer real-time chat online. By 1982, the company provided wide-area networking capabilities to corporate clients. CompuServe also entering the international arena in Japan in 1986, developing a Japanese-language version of CompuServe.

         Sadly, those days are long gone. CompuServe's parent company, America Online (AOL), has likely contributed to CompuServe's downfall. AOL has a history of adding subscribers faster than it can add equipment to accommodate them. This means that many AOL users have difficulty establishing a connection to AOL, especially during peak periods due to its weak infrastructure. CompuServe users suffer from the same types of problems.

         In addition to connection difficulties, users are riddled by a number of problems unique to CompuServe, which includes its faulty rebate program, mismanaged forums, overuse of subcontractors and a poor customer service department.

    Faulty Rebate Program
         Like AOL, CompuServe devised a plan to increase its customer base. AOL's plan has been to continually spend a considerable amount of its resources on marketing campaigns.

         CompuServe devised its own marketing campaign and it employed the use of rebates. The rebate contract it developed reduces the price of a newly purchased computer by $400 but requires the purchaser to sign up with CompuServe's Internet service at a rate above its normal amount. Why should rebate holders pay more for the same service non-rebate holders receive? No one knows.

         The rebate offer is not without many critics. Even though CompuServe has ties with CNET, Stephanie Miles who is a CNET writer indicates that the deal is heavily slanted in CompuServe's favor and is no deal at all.

         Part of the problem with the rebate is a hidden cancellation fee. If a rebate holder decides to cancel the agreement, CompuServe charges a hefty fee. In practice, the fee is used to intimidate users from canceling service. Many people are not fully aware of contract particulars and allow this intimidation tactic to stop them from gaining better service elsewhere. I reality, when CompuServe cannot hold its half of the agreement, the contract will have been broken by CompuServe and the cancellation fee need not be paid.

    “The fact remains that if CompuServe's negligent forum structure cannot prevent nor identify when volunteers insult an adult, there is no telling what could happen to children whom stumble into such areas.”

         At the heart of the fiasco is CompuServe's inability to handle the rebates, as reported by The Washington Post and numerous other reputable news agencies. CompuServe decided to cooperate in an investigation into its rebate program. Of course, CompuServe executives did not decide to participate in an investigation until the Florida government was brought on board due to a class-action lawsuit initiated by attorney Byron Peterson. Where CompuServe executives might use the term 'cooperation' to characterize the investigation, the term 'pressure' is much more fitting.

         As if that were not enough, The Washington Post article hints that there may be duplicity between CompuServe's potentially deceptive rebate offer and the retailers who push the rebates on customers to make computer sales. The rebate offer helps retailers move merchandise off their floors due to the impact of the rebate on the sticker price. However, consumers feel a pinch on their wallets over the long-haul and also receive substandard performance to boot.

    Mismanaged Forums
         There is another problem with CompuServe's service. Even though CompuServe appears to be concerned with child-safety, its forums are structured in such a way to inhibit child-safety procedures because the forums are maintained by a network of unsupervised volunteers. CompuServe may be relying on loopholes because the structure is currently legal. However, the structure has not been fully tested by the courts.

         CompuServe's forum structure has allowed unsupervised volunteers to insult a woman named Tina ( who went public with her traumatic experience on two newsgroups ( service.compuserve and chi.internet). Tina admitted that a CompuServe representative did acknowledge the situation by offering an apology for the incident via telephone.

         CompuServe was contacted concerning its forum structure, which would allow Tina ( to be insulted by its volunteers on a CompuServe forum. CompuServe never responded to the specifics of the event nor the structure of its forums. After pursuing this topic within the service.compuserve newsgroup [June 1st, 2000: Re: CompuServe has no Response Concerning Child-Safety], one user '' claimed he obtained the following response from a CompuServe employee:

    You will need to check with the Sysop of the forum for assistance. Forums on CompuServe are run, not by CompuServe, but by independent contractors, and they are responsible for all forum content. We do not have any information as to the content in a specific forum."
    -- (Washington K., Member Services)

         '' made reference to that quote numerous times within that newsgroup. It points to CompuServe's critical error. If CompuServe is unaware of the events that transpire on its forums, which is clearly indicated by the quote above, how can CompuServe claim it values child-safety?

         The fact remains that if CompuServe's negligent forum structure cannot prevent nor identify when volunteers insult an adult, there is no telling what could happen to children whom stumble into such areas. If CompuServe truly cares about child-safety, it needs to restructure its system. It needs to ensure safety by managing its forums with screened employees.

         Of course, restructuring its forums would require diverting funds, inevitably making a dent into profit. Like car manufacturer schemes of the past, it may be more profitable for CompuServe to assume liability risks and settle out of court instead of restructuring its forums and taking a hit on profitability. Such a strategies would be unethical and illegal. If this reporter were to stumble upon a key internal memo approaching this topic, CompuServe would easily be crushed by its own bloated weight.

    Overuse of Subcontractors
         The rope that ties CompuServe's rebate program to its forums is subcontractors. In this growth phase, CompuServe has turned to subcontractors that it depends upon for its services.

         The rebate program was initially handled by a subcontractor. The subcontractor was unable to process the demand of the rebate because it drummed up a lot of business for CompuServe. It decided to step in and clean up the mess due to pressure by the Florida government as mentioned above.

         CompuServe uses subcontractors to manage its forums as well. CompuServe does not supervise them and only steps in when directly contacted by concerned individuals. This situation is legal but sheds light on CompuServe's unsightly underbelly and exposes a probable two-fold business strategy.

         First, it allows CompuServe to expand beyond its immediate parameters. Second, it escapes liability if one of its subcontractors runs into a catastrophic problem.

         However, companies that choose to go this route run into huge problems. They mainly lose reliability and credibility. After all, why pay for a name and a logo when it is evident there are companies that offer better services at cheaper rates?

    Poor Customer Service Department
         CompuServe's customer service, similar to AOL's, is lacking. One woman informed me of her troubles with CompuServe's customer service staff; her name is Tina C [not to be confused with the Tina mentioned under forum mismanagement]. She was dealt a huge blow. Her inability to connect to the Internet using CompuServe's service was met with argumentative personnel who were either unable or unwilling to help her with her problem.

         As a result of her contact with CompuServe's customer service personnel and her inability to achieve an Internet connection, she pursued the matter as directed by The Liberator's consultants.

         Since CompuServe could not provide its half of the agreement, the rebate contract was terminated and Tina C. was not required to pay a cancellation fee. Tina C. has moved on to another company and has been able to achieve a connection to the Internet.

         My year-long adventure with CompuServe's problems began with Tina C.'s difficulties. It encouraged me to seek out noteworthy articles, testimonials and editorials by respectable news agencies, which were very abundant in number. They detailed common negative themes with CompuServe's services.

         Research on newsgroups, where I continue this ongoing fact-finding mission, has been very informative. I encountered a number of CompuServe loyalists who went to fanatical ends to inhibit my investigation. These loyalists, some of which were closely tied to CompuServe, opposed my investigation and tried to sabotage it using a barrage of insults and attempts to assassinate my character involving unflattering and unskillful impersonations. A few threatened my personal safety.

    “After all, why pay for a name and a logo when it is evident there are companies that offer better services at cheaper rates?”

         Nevertheless, I never faltered from my mission. The insignificant downsides immediately mentioned above were clearly outweighed by the benefits to those remaining CompuServe customers who continue to experience similar problems. These people have been comforted knowing their experiences are not isolated events and are actually common to many CompuServe customers.

         I have never advocated any particular Internet provider. I do, however, strongly suggest Internet surfer stay away from long-term contracts. Research shows local providers offer better deals to those who are slightly knowledgeable of the Internet.

         In short, stay away from CompuServe. It is not worth the hassle, especially since it may be completely absorbed by its parent company, AOL, in the near future. With creative anachronisms like America Off Line, AOL is not without many of its own critics.

         If you would like to share your stories about CompuServe's problems and help the Florida investigation, visit our bulletin board or send us an email message.

    Many Resources and Avenues for Further Study

  • Washington Post: Rebate Bait Hooks Some Customers
  • ABCNews: Crackdown on Bad Ads
  • ABCNews: Computer Rebate Run-Around
  • Consumer Affairs: CompuServe Complaints
  • NaplesNews: Florida couple sues CompuServe over rebate
  • Petersen & Hawthorne, P.A: CompuServe Rebate Class Action Site
  • Epinions: Danger ... RIP OFF Central
  • Epinions: They Should Have Called It "CompuStink"!
  • InfoStructure: AOL vs. Local ISP
  • CNET: How much do rebates save in long run?
  • ABCNews: Service For Sale
  • The Liberator: Report on CompuServe
  • The Liberator: Complaint Letter by Tina C.

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