Verizon Wireless reached a record-breaking settlement with the Federal Communication Commission over "mystery fees" charged to its cell phone customers.
Verizon agreed to make a $25 million payment to the U.S. Treasury, and to promptly refund a minimum of $52.8 million to about 15 million customers.
The payment is the largest in FCC history.
The agency’s Enforcement Bureau began investigating Verizon Wireless in January 2010, prompted by consumer complaints and press reports about unexplained data charges. Most of the charges were small—in the $2 to $6 range—and involved “pay-as-you-go” data fees for customers who did not subscribe to a data package or plan.
For example, customers were charged for unauthorized data transfers initiated automatically by applications (like games) built into certain phones, or for accessing certain web links that were designated as free-of-charge, like Verizon’s home page.
“People shouldn’t find mystery fees when they open their phone bills -- and they certainly shouldn’t have to pay for services they didn’t want and didn’t use,” said FCC chairman Julius Genachowski in a statement. “In these rough economic times, every $1.99 counts.”
Verizon in a statement stressed that the problem was “discovered through our own investigation in response to customer inquiries” and that “We have taken this action because it is the right thing to do.” The company also said that by far the single largest problem was caused by “a very small data ‘acknowledgment’ session sent by software pre-loaded on certain phones.”
A Verizon spokesperson said the company is not disclosing the names of the lawyers who worked on the settlement. In the past, the company has turned to Wiley Rein partner Andrew McBride for FCC matters and other litigation. McBride did not return a call seeking comment.
The consent decree was signed by Verizon deputy general counsel John Scott III and FCC Enforcement Bureau chief P. Michele Ellison.
“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,” Ellison said in a statement. “I am gratified by the cooperation of the Verizon Wireless team in the face of these issues, and pleased they are taking the high road.”