Verizon, FCC Reach $25M Settlement in Mystery Charge Case
Verizon Wireless has agreed to a landmark settlement with the Federal Communications Commission to resolve allegations that it bilked customers out of millions of dollars in accidental data charges over the past three years.
Under the agreement, Verizon has agreed to pay the government a $25 million settlement fee, a sum that FCC officials said is the largest the agency has ever secured through a consent decree.
Verizon also agreed to refund $52.8 million to subscribers for the erroneous charges, which came in the form of data-usage fees billed to consumers who don't subscribe to monthly plans. Verizon's "pay-as-you-go" customers are billed at $1.99 per megabyte of mobile data usage, but some 15 million current and former subscribers received charges triggered by software preloaded on their phones or other inadvertent data sessions.
"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.
On a conference call with reporters, FCC officials indicated that they are looking into dubious charges from other companies, but declined to comment on any ongoing investigations. They said that the Verizon investigation fits into the commission's broader inquiry into the billing practices of the wireless industry, particularly the recent probe into surprise charges that the commission has termed "bill shock."
Earlier this month, the FCC voted to begin a proceeding to write new rules requiring wireless carriers to provide alerts warning subscribers when they are approaching their monthly limits of voice, text or data usage, and commission officials today said they plan to become more active in responding to consumer complaints against their mobile service providers.
FCC officials touted the compliance requirements that Verizon agreed to as part of the settlement, including the formation of a dedicated task force to respond to complaints about data charges, and periodic reports the carrier is required to submit concerning its dispersal of refunds and customer-service practices.
In a statement, Verizon said that that it had begun an internal inquiry into the matter before it had been contacted by the FCC, and has already begun reimbursing customers for the data charges, generally issuing credits for between $2 and $6.
"Verizon Wireless works very hard to simplify the wireless experience for customers and to ensure that customer bills are accurate," the company said. "Nonetheless, internal billing processes can be complex and, in this case, we made inadvertent billing mistakes. We accept responsibility for those errors, and apologize to our customers who received accidental data charges on their bills."
The company said that it is modifying the software that triggered the bulk of the charges to correct the error, and adjusting the settings for certain websites that should be free to access for subscribers without data packages.