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Verizon Strikes $25 Million FCC Settlement Over Bogus Fee
Though all told, Verizon still probably made a killing...
by Karl Bode 03:27PM Thursday Oct 28 2010
For years we've been tracking how Verizon socks wireless customers with a bogus $1.99 per MB data access fee -- incurred even if the user's phone is off or the battery was dead. Even users who had data access on their phones blocked were socked by the fee -- given that the message sent to users to tell them they couldn't get data consumed 0.06 kilobytes of data -- resulting in a $1.99 data fee.

Click for full size
The fee was first exposed by the Cleveland Plain Dealer last year, though the story went mainstream after a whistle blower told the New York Times that Verizon was aware of the glitch -- but was too in love with the millions in additional revenue it generated to do anything about it.

After years of pretending the problem didn't exist, Verizon admitted early this month they'd been charging millions of customers this fee for up to three years, and would be refunding consumers to the tune of $50 million. As we guessed then, the announcement wasn't about being nice -- it was made to pre-empt the findings of an FCC investigation and give the illusion they were coming clean of their own volition.

In fact, the FCC began investigating Verizon in January after news reports on the fees (including reports here) began to catch the eye of FCC officials. Today the FCC announced (pdf) that they have ended their investigation into Verizon with a $25 million settlement. As part of the settlement, Verizon must issue immediate refunds to 15 million consumers, cease all future fees of this type, and offer data blocks to any customer who seeks to avoid data charges on his or her bill. Said FCC boss Julius Genachowksi (pdf):
quote:
I am pleased that Verizon Wireless is now taking the appropriate steps to repay 15 million consumers more than $52 million dollars. Their $25 million payment to the U.S. Treasury -- the largest in FCC history -- is an important recognition of the harmful impact on consumers. It will serve as a significant deterrent to others in the future.
Well, maybe. The risk of public flogging wasn't a deterrent, because Verizon just ignored news reports, lied to the FCC, and kept doing it. The financial punishment similarly isn't much of a deterrent because if you do the math -- Verizon potentially billed (at least) fifteen million consumers (at least) $2 a month for two to three years. I've talked to users who've fought Verizon billing about this fee every month -- for years. Other users only saw the fee once. Some users saw the $1.99 fee several times each month.

On the high end of the estimate scale, that means Verizon could have potentially earned more than a billion dollars off of the fees -- far exceeding the $25 million in settlements and $50 million in consumer refunds. Broadband Reports has confirmed that the FCC didn't do an audit on Verizon's estimates or check Verizon's math -- something that's historically not a good idea. You can probably bet that if Verizon was willing to settle this for $75 million, the money earned from the fee was substantially higher.

So while it was good that the FCC acted, given the FCC's efforts did ultimately put this fee to bed years later -- Verizon still very likely made out like a bandit, and didn't have to technically admit any wrong doing. The good news? Consumers are getting refunds now -- and that $50 million total is not capped under the terms of the settlement. In other words, if you disagree with the amount of money Verizon sends your way, the settlement involves giving consumers the right to appeal their refund total with the FCC.

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Cogdis

join:2007-03-26
Floral Park, NY

Got my check today

I got my refund check today for $6.25. Considering they billed me almost every month for a year up until I canceled the service in 09, and then another month AFTER that, I think they short-changed me a bit!

ToxicDrew
Premium
join:2001-09-24

1 edit

Re: Got my check today

I got a whopping $2.27 today after years of being over billed. I called many times up until the rep got nasty with me and I cancelled.
--
dream your dreams with open eyes and make them come true...
tman852

join:2010-07-06
kudos:1

Dumb

Shouldn't have happened in the first place.
cdbma

join:2003-01-19
Bolton, MA

1 edit

what I could do with $25M...

The money will be collected and then immediately find its way into the abyss known as the Federal Government. Overcharged Verizon customers will probably end up subsidizing some bridge to nowhere! In the long run, we still lose.

As the article mentions, paying the $25M is the easy (and economical) way out. Reminds me of a recent comment by a NFL player regarding fines for illegal hits. He said that the fine is really not a big deal, but getting suspended for a game would definitely get his attention.

We need something that will get a company's attention. Verizon said "woops!" and the Feds caved. It's called fraud and you and I would go to jail for ripping people off like this.
chgo_man99

join:2010-01-01
San Jose, CA

I would call it ghost data fee

considering we have upcoming Halloween
elray

join:2000-12-16
Santa Monica, CA
Reviews:
·Time Warner Cable
·EarthLink

The New (FCC) Math

Lessee... $2/month x 100 million customers x 2 years = a coupon for a 15% discount on leather accessories when you purchase them at a Verizon store, OR 15 free minutes added to your monthly allocation when you renew your contract.

And y'all want your government to regulate broadband.

Incredible.
TheRogueX

join:2003-03-26
Springfield, MO
Reviews:
·Mediacom

Re: The New (FCC) Math

This reply is stupid. It's completely off-base and ridiculous. You're trying to turn this issue into an anti-government regulation, pro-free-market issue.

If it were left to the damn free market, VERIZON WOULD STILL BE ISSUING THESE CHARGES AND DENYING WRONGDOING.

YES, I want the government to regulate. But I want the FCC to be composed of people who are NOT IN THE POCKETS OF THOSE WHOM THEY PRETEND TO REGULATE.
--
»/im/82288374/5591.png
Halfdead14

join:2009-03-01
Paso Robles, CA

Re: The New (FCC) Math

Exactly my thoughts.

thegeek
Premium
join:2008-02-21
right here
kudos:2

New Verizon Fee Coming For All Customers

I'm sure Verizon will add a new bogus below the line fee for every customer every month for about $1.99 per line. It will be called something like Regulatory Data Block Technology Improvement Program Recovery Fee.

dvd536
as Mr. Pink as they come
Premium
join:2001-04-27
Phoenix, AZ
kudos:4

Re: New Verizon Fee Coming For All Customers

said by thegeek:

I'm sure Verizon will add a new bogus below the line fee for every customer every month for about $1.99 per line. It will be called something like Regulatory Data Block Technology Improvement Program Recovery Fee.
What? you mean verizon doesn't have a magic money tree?
--
The shortest distance between 2 points adds 1.5 stars to T. want $25? solve »coord.info/GC20A37 for me

Kell

@qwest.net
I had this fee almost every single month on two phones. I called two days ago and was told there was nothing I could do since I paid the bill therefore agreeing to the charges. I received my new bill yesterday, and after checking it found that I have a $1.99 charge on 3 out of 5 phones for a 411 charge. Needless to say, no 411 call was made from those phones. Sounds like the New Verizon Fee to me.
old_wiz_60

join:2005-06-03
Bedford, MA

lots of luck..

getting any refund from Verizon. With their creaky billing system you're far more likely to be re-charged the entire amount.

funchords
Hello
Premium,MVM
join:2001-03-11
Yarmouth Port, MA
kudos:6

Made out LIKE a bandit?

Karl, you're soft-pedaling.


Hater

@digitalpath.net

And no one will cancel

Why everyone loves Verizon, I will never know

DoRight

join:2007-07-20
East Petersburg, PA

Re: And no one will cancel

I hate their overprice service but had to go with them.

cork1958
Cork
Premium
join:2000-02-26
said by Hater :

Why everyone loves Verizon, I will never know
Almost makes me glad they sold out to Frontier!!

Hated their wireless service here. Had their service for 2 years (contract) but dumped them the day after that was over.

They will find another way to recoup what little they're refunding though. Verizon is the king of greed and the ripoff!!
--
The Firefox alternative.
»www.mozilla.org/projects/seamonkey/
Crookshanks

join:2008-02-04
Binghamton, NY
said by Hater :

Why everyone loves Verizon, I will never know
I despise them but I know a good product when I see one. If you can find me another carrier with better business practices that matches their Upstate NY network I'll switch in a heartbeat.

T-Mobile is the only carrier that doesn't pull this kind of crap and their network around here is useless outside of the city. Drive two minutes from the interstate and you have no service in many areas.

unknvoip
RIP goose
Premium
join:2006-07-25
Rochester, NY
kudos:1
Reviews:
·ViaTalk

1 recommendation

Not every month

You keep saying they charged 15 million people at least $2/mo, but that is not the reality. I can say this from my experience. I was charged a handful of times on a couple of my lines, it was not 'every' month.

I was able to get some refunded by calling in, but was once told that to block data access on the phone, it could not longer send and receive picture messages covered under my text plan.

Is Verizon paying as much as they need to? I highly doubt it, but it is not the windfall you make it seem. It would take some really dumb people to pay a $2/mo charge for a service they weren't getting - but hey, it could happen.

I see on my old account that I have a $2.27 credit. Probably from a charge that I forgot to call and get credit for.

Karl Bode
News Guy
join:2000-03-02
kudos:39

1 recommendation

Re: Not every month

I've seen some users complain about this fee on a one off basis, but I've seen other people who've fought Verizon billing about this fee on their bill every month for years. Others saw the fee multiple times in one month.

So yeah, 72 months x $1.99 per month x 15 million is the high-end estimate, but whatever the real number is I bet it's much higher than 25-75 million. In fact if Verizon agreed to $75 million I'd bet my home that it's probably closer to several hundred million.

Still not clear (I've asked and am waiting for response) if the FCC actually went in and confirmed the numbers, or if they just trusted Verizon math.

unknvoip
RIP goose
Premium
join:2006-07-25
Rochester, NY
kudos:1

Re: Not every month

Thanks for following up. I agree that it is likely more than they agreed too, otherwise they would have fought to reduce it. I am interested on the FCC response, if you get it.

Karl Bode
News Guy
join:2000-03-02
kudos:39

Re: Not every month

Confirmed with FCC they did NOT audit and confirm Verizon's estimates, though the good news is the $50 million in settlement is not capped -- and if consumers disagree with the refund they get they can appeal to the FCC.

FFH5
Premium
join:2002-03-03
Tavistock NJ
kudos:5
And not all those $2 fees was an accident. Many were no doubt people looking something up on the web, but who weren't regular browsers at all.
--
Take poll on how you will vote on Nov 2nd
nycityny
Premium
join:2005-08-09
New York, NY
said by unknvoip:

It would take some really dumb people to pay a $2/mo charge for a service they weren't getting - but hey, it could happen.
You're being rather high and mighty by assuming that "dumb" people missed the charge. Most people are too busy to read through all the garbage fees on a cellphone bill to determine if they are valid. And a $1.99 charge would look just like another garbage surcharge or recovery fee.

unknvoip
RIP goose
Premium
join:2006-07-25
Rochester, NY
kudos:1

Re: Not every month

Ok, I take it back - they are not 'dumb' but 'LAZY' instead. I am busy too, but I notice when a bill amount changes.

The bill is not hard to read - the fee is right there under "Data Usage".

FFH5
Premium
join:2002-03-03
Tavistock NJ
kudos:5

Re: Not every month

said by unknvoip:

Ok, I take it back - they are not 'dumb' but 'LAZY' instead. I am busy too, but I notice when a bill amount changes.

The bill is not hard to read - the fee is right there under "Data Usage".
They don't read their bill because they get it electronically and they pay automatically. They just don't bother to even look at the bill.

unknvoip
RIP goose
Premium
join:2006-07-25
Rochester, NY
kudos:1

Re: Not every month

I understand electronic billing, I get mine that way, have autopay selected - but I still look at it.

To me looking at the electronic version is easier than sorting through the snail mail for it.

zalternate

join:2007-02-22
freedom land

1 edit

Read your monthly bills

For those that just pay the bill automatically from their accounts or actually write a check(based on only looking at the pay amount), check your statements every month.
If you see extra charges, that are not justifiable, Contact the company first to get their official statement before escalating it. Then contact your States Attorney General or consumer protection agency. Make sure you mention fraud and theft.
Why do people just sit on their damn ass's until the government does something? A million or so individual people disputing a charge at once, is much more effective than 20 people disputing a charge and escalating it up over a couple of years to the federal government, to end up with a total B.S. resolution that still allows the company to keep tens of millions of illegally gotten dollars.
--
Consumer Rights is more than just a suggestion.

mix

join:2002-03-19
Utica, MI

Refund on current billing

My Sep 13 - Oct 12 Verizon bill, due date 11/07/10 has this line item (where X's were my phone number):

Megabyte / Kilobyte Adjustment for XXX-XXX-XXXX on 10/01/10 -4.26

Dare I go and figure out how many of these 1.99 charges I had over the course of the last few years?

south1178
Premium
join:2001-12-17
Cleveland, OH

Re: Refund on current billing

said by mix:

My Sep 13 - Oct 12 Verizon bill, due date 11/07/10 has this line item (where X's were my phone number):

Megabyte / Kilobyte Adjustment for XXX-XXX-XXXX on 10/01/10 -4.26

Dare I go and figure out how many of these 1.99 charges I had over the course of the last few years?
I got the same thing.
--
Buckeye Stangs - Ohio Mustang Club
dougau
Premium
join:2007-08-09
Dickson, TN

Verizons new way to rip you off

Here's the latest one, during a "update" to a phone I have running Android, the LG Ally to be exact, Verizon installed a program called "City ID" which cant be removed unless you void the warranty by rooting the phone. It was okay during the "30 or however many day trial" it gives you without asking but now that it has expired it pops up after every few calls asking me if I would like City ID for $1.99 a month and you have to tap yes or no to dismiss the screen. I'm guessing they're counting on lots of people taping yes by mistake.

So my question is can anything be done to force Verizon to allow users who don't want this nag ware on their phones remove it as it does try to trick you into the $1.99 a month charge?

michieru
Premium
join:2009-07-25
Miami, FL

.

Even though it was delayed I am glad the FCC did something about it finally even though I am not a Verizon customer.

notyet321

@verizon.net

Revenue vs. income

Even if they were required to pay back all of what they billed erroneously, they'd still have come out ahead on the interest alone.
Mr Matt

join:2008-01-29
Eustis, FL
kudos:1
Reviews:
·Millenicom
·Embarq Now Centu..
·Comcast
·CenturyLink

No sense of fairness!

Make a phone call through a Verizon pay phone, get caught not paying and you will go to jail.

Check out Bob Cummings incarceration for getting caught at an airport for using a Blue Box to make calls through a pay phone without paying L.D. charges. On the other hand Verizon and other corporatist can rip off citizens all the time, through various schemes and scams and get away with it. Then when they get caught our legal system turns it's back, of course that is because they pay off the most unethical lawmakers their money can buy. Our lawmakers better wise up or their will be hell to pay when citizens get fed up with the inequality.

Ben
Premium
join:2007-06-17
Glen Carbon, IL

1 edit

ONLY $25 million?

_ Disgusting. Absolutely disgusting. Here's a little math:

15 million customers * $2/mo. * 1 month = $30 million.

_ That $30 million is for only one month, and it's still greater than $25 million, the amount of the settlement. Of course, this rip off occurred many more times than just in a single month.

_ Here's some more math, but this time for just one year, which is less time than this has been going on.

15 million customers * $2/mo. * 12 months = $360 million!

_ So they didn't probably make a killing, they did make a killing. There's no "probably" about it.

•••

rchandra
Stargate Universe fan
Premium
join:2000-11-09
14225-2105

"earned"?

"...Verizon could have potentially earned more than a billion dollars off of the fees..."

ahhhhhh...more like "collected." Not quite sure "earned" would be the word.

Locally, WBEN got this (somewhat) wrong by not mentioning these charges were to people who asked for data to be blocked.

Go Phone (AT&T) did a similar thing to me; I asked (because of the expense) for SMS and data to be disabled. They apparently didn't, because I accidentally hit some button on my phone, and there I was at some blank page in a browser. After exiting that, a message told me I had just spent $0.35 (you get a message every time you spend account money--how much, and your balance). However, when called (within minutes), this was not contested, a refund was issued to my balance, and the blocking was properly instituted (the "GPRS connected" indicator no longer appeared).

Still...I have to ask...if you do have blocking as part of your service offering, what part of "I don't/didn't want this" did you not understand?
--
English is a difficult enough language to interpret correctly when its rules are followed, let alone when a writer chooses not to follow those rules.


Jeopardy! replies and randomcaps REALLY suck!
wombough

join:2001-08-30
Albany, GA

Still got chaged

Just last month. I looked at my bill while deployed in Afghanistan and what do I see but a 1.99 charge for data. Amazing.

mdttb

join:2002-02-12
Anaheim, CA

bs

I have 4 lines all of them have been charged at one time or another for the 1.99 data fee over the past 3 years. On one line it's been hit with the 1.99 fee for the past 4 or 5 months. I'm getting back $8.80 (BFD) when I questioned the rep that they owe me alot more then just the $8.80 I was informed they're only going back 90 days !!!!

What a crock !!!