The lawsuit, filed in the US District Court in Alexandria, Virginia, seeks $US1000 or three times the amount of damage (whichever is greater) each for the estimated 8 million people who have already downloaded the faulty software and "have had the operation of their computer altered as a result thereof," according to the filing.
AOL officials responded by stating their intent to fight the allegations.
"(The allegations) have no basis in fact or law and we intend to vigorously contest them," said Rich D'Amato, an AOL spokesman. "(Version 5.0) does not prevent members from accessing the Internet through other providers."
AOL has come under much criticism since releasing the software as users have complained of interference it causes with other computer programs, particularly software of other ISPs.
The filing alleges that "as part of its normal operation, Version 5.0 disables, interrupts, alters, or interferes with operations of other software installed on those same computers, including but not limited to disabling any other internet software which provides internet access by non-AOL ISPs that also may be installed on the computer."
In particular, the lawsuit claims that "AOL knew of or should have known that it operated in such a manner."
AOL is used by many people as either a back-up to their work dial-up or as an Internet connection to use while at home or on the road.
"I upgraded to AOL 5.0 and blindly thought everything went fine," said Kenneth Novak, who uses AOL as a back-up. "When I tried to dial in to my work location with dial-up networking, I was unable to use the IE (Internet Explorer) 5.0 browser through our firewall."
The problem seems to be affecting people from all technological backgrounds as well, perplexing the first-time user and veteran computer and Internet users alike.
"I am a computer consultant and I know my way around installing software," said Kevin Wohler, another self-proclaimed AOL 5.0 victim. "I ran into multiple problems, not the least of which was the interference with my normal ISP."
Most of all, users were most distressed about how an "upgrade" seemed to cause mostly harmful and unauthorized changes to their systems.
"AOL made changes to my system that I would have never agreed to," Wohler said.
AOL officials, however, claim that AOL 5.0 does not make any changes to anything, including settings, unless the user permits them.
"AOL software allows users the ability to set AOL as their default," D'Amato said. "They must choose AOL to be their default Internet setting."
Some of the blame may fall on Microsoft Corp., said a source speaking on terms of anonymity. If a user installs AOL 5.0 software when no other software had been used previously, Microsoft Windows automatically becomes the default.
"Windows wants there to be a default so it automatically chooses one without the user's choice or permission," the source said.