Verizon To Pay $25M For Years of 'Mystery Fees'

Ponca City writes "The Washington Post reports that the FCC has reached a record $25 million settlement with Verizon Wireless over the company's wrongly charging subscribers 'mystery' Internet fees over the past several years — the largest settlement in FCC history. With the action, Verizon Wireless's total costs associated with false data fees reached $77.8 million, one of the largest payouts for false business practices in the communications services industry. '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,' says FCC Chairman Julius Genachowski. 'In these rough economic times, every $1.99 counts.' Verizon Wireless said in a news release that its overcharges were inadvertent. 'We accept responsibility for those errors, and apologize to our customers who received accidental data charges on their bills.'"

Comments

An insult of a fine

[Sonny Yatsen]

It should also be noted that Verizon, as part of the settlement, is also refunding $52.8 million to their customers. But let's look at this more closely, shall we?

Verizon Wireless has 93.2 million subscribers. Let's assume (VERY conservatively) that only 5% of their customers were hit with bogus fees. Let's also assume that everyone who was overcharged was overcharged the bogus fee of $1.99 per month. The period in which the bogus fees were charged was about 3 years.

So we have: 4.66 million (or 5% of the customers) * (1.99 * 36) = 333,842,400 dollars. And that's the REALLY conservative estimate.
If every one of Verizon's consumers were overcharged $1.99 for 3 years, then that would come out to be 6,676,848,000 dollars.

So, for 3 years, they plundered their customers with bogus fees and now they're walking away paying back less than 1/3rd of the REALLY LOW END estimate of their misbegotten gains. No wonder companies act so egregiously bad! Why would they have to do things according to the law if they'll make more by breaking the law than they'll ever have to pay back in fees?

I like how they characterized it as just some clerical mistake. I wish I made clerical mistakes that can net me $300 million dollars.

Re:An insult of a fine

[sxeraverx]

So, for Verizon, this was a profitable venture. And profitable for whoever the fine is paid to as well, right?

Doesn't this all feel more like an incentive to continue this behavior if the full amount of the money wasn't refunded in addition to the fine?

Even if this instance weren't profitable, it'd still be incentive to continue doing other things like this. If you get caught, just pay it back, no harm no foul. And if you don't get caught, well, then you made out in the end.

Isn't this is exactly the kind of behavior that the possibility of punitive damages in a court settlement is supposed to prevent? If so, I realize punitive damages should probably only be awarded in the case of negligence, but it seems like if this has been going on for three years, it's hard to claim it's an accident and not be considered negligent in fixing it. But for some reason, the FCC decided they wouldn't pursue those damages.

IANAL, and I don't have much experience with the law, but I'm curious whether or not this still leaves Verizon open for a class action lawsuit. If this is has been going on for three years, with charges customers would have had to dispute each month, it seems like Verizon should reimburse their customers for the time they spent disputing the charges, and pay hefty punitive damages to discourage Verizon and others from doing the same thing in the future.

Assuming an average income of $32,000, and a probably conservative estimate of 15 minutes to detect, report, and rectify the the charges, each month, over 36 months, that's

$16/hour * .25hours/month * 36 months + $2/month * 36 months = $216 per person affected.

If 5% of the people were affected, that comes out to just over $1 billion in compensatory damages. On a conservative estimate.

Re:An insult of a fine

[shadowfaxcrx]

The really amusing bit is that corporations are legally considered people, unless it's disadvantageous to the corporation in a given situation. Want to donate to a politician? You're a PERSON! Want to run ads blasting another politician? You're a PERSON!

Want to avoid the felony grand theft penalties PEOPLE face when they steal millions of dollars? Oh, well, OK, I guess you're not a person until the judge makes his decision on the penalty you face.

To my way of thinking, if corporations want to be considered people, then that's fine. But if the corporation commits a crime, it goes to jail, by which I mean no business transactions except for payment of debt, at ALL, for the length of the jail sentence. Verizon steals millions of dollars? Guess what folks? You're shut down for the 1-20 year jail sentence. Yes, that will ruin you, but you're the one who wanted to be a person.

Re:An insult of a fine

[MickyTheIdiot]

That's the reality of corporate personhood in a nutshell.

All of the advantages (rights, freedoms, profits)
with none of the disadvantages (jail, death, taxes)

(And don't say they pay taxes. The majority of corporations in the U.S. pay no taxes AT ALL).

If corporations are bad actors in a country, they ought to be have their charter revoked with no enumeration to stockholders. If CEOs are so responsible for a company (as they insist every time the subject of CEO pay packages come up) then they go to jail when the company breaks the law.

Re:An insult of a fine

[Anonymous Coward]

Back when I was 17~19, I was on my dad's family plan. We got a mystery $14.99/month VPAK that appeared on multiple phones multiple times. None of us used the multimedia features of the phone, and I even went online and parental-control-banned all multimedia features from my own phone, but the charge still kept coming back. Of course, every time we complained they revoked the charge, but we had to scan our bill every month to make sure we didn't have the bogus charges.

Finally, after the charge came back at least 6 or 7 times, my dad got fed up and told Verizon that if the charge appears there one more time, he's canceling the whole family plan, and the company that he is an executive at will switch to Sprint (the company has a couple thousand verizon phones). The charge never re-appeared.

I am completely convinced that these charges are intentional, and I bet they target people who have kids and family plans, as they're more likely to blame their kids for downloading something than complain that Verizon was giving them bogus charges.

Re:An insult of a fine

[erroneus]

I, on the other hand, have witnessed problems with every line of Verizon service where I work. That is everything from Verizon Wireless to T1 to OC3 and MPLS services. Verizon billed another company for our service for almost 3 months. And for the services we have there are always unanswered and "unanswerable" items on our bills. We are presently in a dispute state meaning they can't turn our service off for non-payment which is part of their standard agreement. I would urge you do the same on your business accounts with issues. What's weirder still, in spite of the fact that no representative can explain the strange charges, they insist that we owe them. Imagine that? We owe something that no one understands? Not even Verizon? Really.

I will never willingly be a Verizon customer.

Re:An insult of a fine

[grcumb]

like how they characterized it as just some clerical mistake. I wish I made clerical mistakes that can net me $300 million dollars.

It'd be interesting to see how much of a dent this makes in their total income - it may be feasible that this was, in fact, simply a clerical error depsite the fact it'd be huge for the vast majorit of us. This doesn't justify it, of course, but I wouldn't rush to assume it was obviously malicious and intentful.

You know, I'd love to agree with you, but tell me this: What are the odds that they would be willing to allow a clerical error that lost them a similar amount of money?

Inadvertent my ars

[Anonymous Coward]

My brother-in-law was on Verizon for years. Each of his phones had a button which connected to the Verizon store where you would go to buy games or ring tones or whatever. My T-Mobile phones always had t-zones buttons; same thing, no big deal. Except for on Verizon, if you didn't subscribe to a data plan, every time you pushed that button, whether intentional or not, your phone initiated a data connection to Verizon and you were hit with the $1.99 fee. I know this because every month he would call Verizon and dispute the charge and they would give him the run around for a while before apologizing and crediting his account for the charges. Because he was under contract, this continued for 2 years. I think Verizon should pay him for the many hours of his life he spent arguing on the phone with their customer service reps trying to get these charges reversed.

On an related note, he is now on T-Mobile (free mobile to mobile calling, woot!)

Verizon: We'll pay $0.25M

[Allnighte]

"A spokesperson for Verizon has issued a report correcting the FCC, stating their settlement with the FCC was at a rate of 0.002 cents, not 0.002 dollars, bringing their total liability to $0.25M."