The FCC’s Enforcement Bureau today reached consent with Verizon Wireless to return $52.8 million to customers who fell victim to “mystery fees,” which the company charged its customers over the last several years. Additionally, the Bureau ordered Verizon Wireless to pay $25 million to the U.S. treasury.
The Enforcement Bureau began investigating Verizon Wireless in January 2010 after a large number of complaints and press reports about unexplained data charges surfaced. The investigation focused on “pay-as-you-go” data fees, charges of $1.99 per megabyte that apply to Verizon Wireless customers who do not subscribe to a data package or plan.
The investigation found that approximately 15 million “pay-as-you-go” customers were or may have been overcharged for data usage over the course of three years, from November 2007 to the present.
In an official statement, Verizon Wireless pointed to the complexity of its internal business processes, saying the charges were the result of “inadvertent billing mistakes.”
“We accept responsibility for those errors, and apologize to our customers who received accidental data charges on their bills,” the statement read.
According to the settlement, the erroneous mystery fees from Verizon Wireless were caused by: unauthorized data transfers initiated automatically by applications built into certain phones; accessing certain web links that were designated as free-of-charge (e.g., the Verizon Wireless Mobile Web homepage); unsuccessful attempts to access data when there was insufficient network coverage to complete the requested data transfer; and unwanted data transfers initiated by third parties and affecting customers who had content filters installed on their phones.
Verizon acknowledged that the “single largest problem, involving the vast majority of credits, was caused by a very small data “acknowledgment” session sent by software pre-loaded on certain phones,” asserting that the problem affected only some of the customers who did not have data plans, and who were not otherwise intentionally using the data features on their devices.
Verizon Wireless has agreed to cease charging customers the incorrect fees. In addition, the company has agreed to take affirmative steps to prevent future unauthorized data charges.
The company will immediately begin repayment of the 15 million customers. Customers who have been identified by Verizon Wireless as being potentially being overcharged for data usage will receive refunds or credits on their October or November bills.
The Bureau also tasked Verizon with ensuring that customers are treated fairly in the future.
Verizon Wireless has agreed to offer data blocks on request, plain-language explanations of “pay as you go” data charges and data plans, and post an online video tutorial to help consumers understand their bills.
Verizon was also ordered to create a Data Charge Task Force, staffed by specially trained customer service experts who will monitor and resolve data charge complaints and other data charge-related issues going forward. The Task Force will issue regular reports to the FCC so the agency can ensure compliance.
The Bureau noted that Verizon’s repayment obligations are not capped at the estimated $52.8 million in refunds identified by the company. Customers who do not receive a refund but believe they had unauthorized data charges have a right to appeal, receive a good-faith review, and reach resolution within 30 days. Verizon Wireless is required to disclose any unresolved complaints to the FCC.
“There is nothing more satisfying to the public spirit than to right a wrong or rectify an injustice,” said Michele Ellison, Chief of the FCC’s Enforcement Bureau, in a statement.
“We salute the consumers who had the tenacity to call attention to this problem. We will continue to monitor the company’s compliance going forward. And, consumers, if you need us, our lights are always on,” Ellison said.
Filed Under: Industry regulations