Verizon Wireless, FCC Settle 'Mystery Fees' Complaint for $78 Million
"Mystery charges" levied by Verizon Wireless on the bills of approximately 15 million customers over the last three years will cost the carrier nearly $78 million. Concluding a 10-month investigation into the matter, the Federal Communications Commission announced Oct. 28 that Verizon will have to "immediately" refund customers a minimum of $52.8 million, as well as make a record payment of $25 million to the U.S. Treasury-the largest payment in the history of the FCC.
The investigation began after a number of consumers complained of being charged fees for data they didn't use.
"Mystery solved: today's settlement with Verizon Wireless is about making things right and putting consumers back in the driver's seat," Michele Ellison, chief of the FCC's Enforcement Bureau, said in a statement. "Today's settlement requires Verizon Wireless to make meaningful business reforms, prevent future overcharges, and provide consumers clear, easy-to-understand information about their choices."
The FCC detailed seven "key consumer protection measures" that Verizon will have to take. The first is to take steps to prevent the unauthorized charges from happening again, which Verizon Deputy General Counsel Mary Coyne, in an Oct. 3 statement originally addressing the investigation, said Verizon has already done.
Second, Verizon must repay the 15 million customers who were overcharged with refunds or credits on their October or November bills. Third, the FCC noted that Verizon's repayment obligations are not capped at $52.8 million, and that customers who do not receive a refund but believe they're entitled to one have a right to appeal, have their case reviewed and receive a resolution within 30 days. And fourth, Verizon must offer "data blocks" to anyone wanting to avoid data-related charges.
The overage charges were related to Verizon's pay-as-you-go plan, which charges customers without a data plan $1.99 per megabyte they decide to use. In the instances of the overages, the $1.99 was applied in instances where an application initiated a data transfer, links were clicked that had been designated as free, network coverage was insufficient to complete a requested data transfer or unwanted transfers were initiated by third parties.
The fifth measure, then, requires Verizon to improve its customer service by offering plain-language explanations of the "pay-as-you-go" data charges and data plans as well as offer online billing tutorials for customers and enhanced training for Verizon customer service representatives on the pay-as-you-go charges.
Verizon must also create a Data Charge Task Force-the sixth measure-that's staffed by specially trained customer service experts who will oversee data charge-related issues and report regularly to the FCC.
And finally, Verizon must submit periodic reports to the FCC on its refund, training and customer service initiatives.
"There is nothing more satisfying to the public spirit than to right a wrong or rectify an injustice," Ellison said.
In July, the FCC launched a Consumer Help Center Website, where consumers can get information about telecommunications issues, receive additional information before making communications purchases, express opinions and file complaints.
"We salute the consumers who had the tenacity to call attention to this problem," Ellison added. "We will continue to monitor the company's compliance going forward. And, consumers, if you need us, our lights are always on."
On Oct. 3, in advance of the FCC's findings, Verizon addressed the overage issue, looking to avoid, The New York Times suggested, being charged with a formal Notice of Apparent Liability. "When we identify errors, we remedy them as quickly as possible," Verizon's Coyne said in the Oct 3 statement. "Our goal is to maintain our customers' trust and ensure they receive the best experience possible."
Ellison, in the FCC statement, commended the Verizon team for its cooperation and for "taking the high road" in "the face of these issues."
On Oct. 22, Verizon announced a 25 percent drop in profits during its fiscal third quarter of 2010, in part due to personnel issues surrounding layoffs. The carrier added nearly a million wireless customers during the quarter, and revenues came in at $26.5 billion, just ahead of Wall Street estimates.