By Brooke A. Masters
Washington Post Staff Writer
Wednesday, February 2, 2000; Page E01

When Kenneth Yates's home computer refused to access his Erols Internet account last fall, he blamed his 11-year-old son for messing it up. Then Yates heard that a glitch in the family's new America Online software might really be to blame.

So Yates teamed up with another AOL customer and filed a class-action lawsuit alleging that the latest version of the company's software--version 5.0--constitutes a deceptive trade practice and violates consumer-protection and computer-tampering laws. The lawsuit, filed Monday in federal court in Alexandria, seeks damages of up to $1,000 for each of the 8 million people who installed the software.

The central problem, lead plaintiff Farhad Khazai of Gaithersburg contends, occurs when users install version 5.0 or upgrade from an earlier version. When Khazai agreed to make version 5.0 his default Internet provider, Yates says, the installing software changed his settings so that he could no longer just click on another provider's desktop icon to access a different account.

"AOL is making people use the Net the way they want it to be used. The Internet is supposed to be like free speech, with open access," said Yates, a Gaithersburg lawyer who specializes in Internet law. He said he has teamed up with a Birmingham-based firm, Gathings, Kennedy and Associates, which has experience with large-scale class-action suits.

AOL spokesman Rich D'Amato said the company could not comment on the specific allegations of the lawsuit, but he said that technical complaints to AOL have dropped 20 percent since the switch to 5.0.

Creating default settings on a customer's desktop that conform to specific companies' software "is a common practice in the industry" that makes the Internet connection more stable, D'Amato said. The potential class is large--8 million AOL users have installed version 5.0, and thousands of them have other Internet accounts. In addition, beta testers of the software earlier told The Post that they complained to AOL about the glitch months before the company created the millions of 5.0 CD-ROMs in circulation.

The lawsuit acknowledges that the damage to each consumer was not especially large, making it impractical for customers to sue individually. Many were able to reconnect with their other accounts after calling their other Internet service provider. And the installing software specifically asks whether the user wants 5.0 as a default, rather than assuming that is what the user wants--another potential defense.

Several lawyers suggested that the other Internet service providers--which had to spend time and money helping their frazzled customers--may have more significant damage claims, but they are not included in the lawsuit.

AOL has settled class-action suits before: It paid off some shareholders who complained about a controversial accounting practice, and it also gave refunds to 128,000 customers who had trouble accessing the service after the company switched to a flat-fee monthly plan.

"One of the key risks for a consumer products company like AOL is the cost to its reputation," said Keith Shugarman, a D.C. lawyer who has been involved in large-scale civil litigation.