Verizon Wireless to Pay Millions in Refunds

http://www.nytimes.com/2010/10/04/technology/04webphone.html?src=busln

WASHINGTON — Verizon Wireless said on Sunday that it would pay up to $90 million in refunds to 15 million cellphone customers who were wrongly charged for data sessions or Internet use, one of the largest customer refunds by a telecommunications company.

Verizon Wireless, which may also be asked to pay a penalty, said the range of potential payments was $30 million to $90 million.
The announcement came in a statement from Verizon Wireless as the company held talks with the Federal Communications Commission about complaints of unauthorized charges and in response to questions about a possible settlement of an F.C.C. investigation into the issue.

Verizon said in its statement that the customers would receive credits from $2 to $6 on their October or November bills or, in the case of former customers, refund checks.

The refunds will be paid to customers who did not have data access plans but who were nevertheless assessed one or more charges of $1.99 because of data exchanges initiated by software built into their phones, or because of charges for inadvertently going online on the phones.

The F.C.C. is likely to press Verizon to pay a penalty for failing to notify customers of the problem, which has been occurring since at least 2007, according to people close to the talks.

Michele Ellison, the chief of the F.C.C. enforcement bureau, said in a statement that the agency was “gratified to see the repayment, but for millions of Americans it’s a day late and a $1.99 short.”

“Getting consumers repaid is just the first step; ensuring this doesn’t happen again comes next,” Ms. Ellison said.

In the last three years, the F.C.C. has received hundreds of complaints from Verizon Wireless customers who said they were charged for data use or Web access at times when their phones were not in use or when they mistakenly pushed a button that activated the phone’s Web browser.

Beginning in 2009, The New York Times and The Plain Dealer of Cleveland, among other publications, reported that customers had been complaining of the charges but had often been ignored by Verizon Wireless. On certain flip phones sold by Verizon, a directional arrow, when pushed, automatically would initiate the phone’s Web browser.

Even if customer immediately canceled the action, they were often charged $1.99 for Internet access, according to the complaints, some of which were detailed by David Pogue of The Times on his blog, Pogue’s Posts.

Customers who contacted Verizon about the charges said that the company had often refused to reverse the charges or discouraged them from blocking the data service on their phones.

Verizon maintained that it had responded appropriately. “Verizon Wireless values our customer relationships, and we always want to do the right thing for our customers,” Mary Coyne, deputy general counsel for Verizon Wireless, said in a statement. “When we identify errors, we remedy them as quickly as possible. Our goal is to maintain our customers’ trust and ensure they receive the best experience possible.”

But Verizon initially played down the issue, telling the F.C.C. in December 2009 that it did not charge customers who had inadvertently started their phone’s Web browser and immediately ended the session.

That month, the F.C.C. formally asked Verizon about news reports detailing the charges. In a letter, Kathleen Grillo, a senior vice president for federal regulatory affairs at Verizon, wrote 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.”

That statement seems to be contradicted by Verizon’s latest statement. “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,” the company said on Sunday.

“These customers would normally have been billed at the standard rate of $1.99 per megabyte for any data they chose to access from their phones,” the statement said. “The majority of the data sessions involved minor data exchanges caused by software built into their phones; others involved accessing the Web, which should not have incurred charges. We have addressed these issues to avoid unintended data charges in the future.”

The F.C.C. began a formal investigation into the unauthorized charges in January. Formal F.C.C. investigations, in which the agency can seek sworn testimony, are usually not disclosed publicly. The F.C.C. said on Sunday that it began looking into the Verizon issue 10 months ago.

In recent weeks, the company and the commission staff have been wrangling over how long the company had been aware of the problem and whether the F.C.C. would initiate a Notice of Apparent Liability, as formal enforcement charges are known.

As an alternative to formal enforcement, the company and the F.C.C. could enter into a consent decree, in which the company would neither admit nor deny the charges, but would agree to make a voluntary payment to settle the issue.

As settlement talks proceeded last week, Verizon indicated to the F.C.C. that it expected that the total amount of the refunds that it would pay to consumer would be about $50 million, according to people close to the settlement talks.

On Sunday, Jeffrey Nelson, a spokesman for Verizon Wireless, declined to comment on whether the company could narrow the range of $30 million to $90 million in potential payments.

 

hm. I was under the same impression too.