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Verizon issuing $50M in refunds to customers

15 million former and current Verizon customers will receive refunds for unauthorized data charges

Financial trends and news by Faith Merino
October 4, 2010
Short URL: http://vator.tv/n/1245

In a move that could cost tens of millions of dollars, Verizon Wireless issued one of the largest, most far-reaching "my bads" by a telecommunications company.

The company announced Sunday evening that it will be refunding 15 million customers for unauthorized data charges. In talks with the F.C.C., Verizon has indicated that the refunds could total up to some $50 million.

Customers will receive credit on their next phone bill, while former customers will receive a check to cover the amount that they were wrongfully charged, according to the company's statement. Most refunds will be fairly small--about $2 to $6 per customer, although Verizon mentions in its press release that some customers will receive larger amounts. 

The brouhaha started back in 2007, when customers began complaining to the F.C.C. that they were receiving data charges when they didn't have a data plan. In some cases, customers were charged when the software built into their phones made data exchanges, and in other cases customers were charged when they accidentally pressed a button that automatically launched a Web browser. Even if customers canceled the session, they were still charged $1.99 for Internet access.

The company maintains that it was not aware of the problem, or of the millions of complaints from Verizon customers.  According to Verizon Deputy General Counsel, Mary Coyne, in the press release: "As we reviewed customer accounts, we discovered that over the past several years approximately 15 million customers who did not have data plans were billed for data sessions on their phones that they did not initiate."

But in 2009, The New York Times and The Plain Dealer of Cleveland reported that customers were complaining of wrongful data charges, but Verizon was ignoring their complaints. Many customers claimed that when they told Verizon about the wrongful charges, the company refused to reverse the charges and discouraged them from blocking the data service on their phones.

In December 2009, Verizon told the F.C.C. that it did not charge customers for accidentally launching their phone's Web browser if they immediately canceled the session. When the F.C.C. probed Verizon on reports about wrongful data charges, Kathleen Grillo, a senior vice president for federal regulatory affairs at Verizon, stated in a letter that "In order to protect customers from minimal, accidental usage charges, Verizon Wireless does not charge users when the browser is launched, and opens to the Verizon Wireless Mobile Web homepage."

The F.C.C. launched a formal investigation into the data charges in January.  When the millions of unauthorized charges came to light, as well as Verizon's willful ignorance of the claims, the F.C.C. indicated that it would consider issuing a Notice of Apparent Liability, which is used to impose a monetary penalty on an organization that has been found to have knowingly and repeatedly committed an offense. 

Verizon Wireless and the F.C.C. have instead chosen to enter into a consent decree as an alternative to the Notice of Apparent Liability.  The consent decree exempts Verizon from having to admit or deny the charges, in favor of voluntarily paying to settle the matter.

Image source: zatsnotfunny.com


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