Verizon gets caught stealing from its customers

October 4, 2010, 4:10 AM UTC

Does continued dishonesty from the mobile carriers signal that more federal regulation is needed in the telecoms space?

Verizon (VZ) got caught with its hand in the cookie jar this weekend and has to pay $90 million to settle with 15 million (likely angry) customers.

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.

The problem is something like this: Verizon sells a customer a phone that can transmit and receive Internet data but the customer has only purchased a voice plan. The phone has data apps, however, and if a customer is tricked into opening one of those apps (or does so accidentally), they get charged for data usage.

I’ve seen phones like this that are loaded to the teeth with tricks to get people go online. Verizon likely thought they could up their revenue by serving data to people to who didn’t desire to go online. The upside was short-lived because enough people were upset to petition the FCC to get involved. The violation of trust was so blatant that Verizon chose not to fight the allegations and just pony up the money in the form of $2-6/ customer, which will be credited in the coming months. If you were a Verizon customer who was victimized but left Verizon since (who could blame you?), you will receive the small check in the mail.

How do consumers keep the carriers in check?  Unfortunately, it seems the only way to go is getting the government involved. Luckily, the FCC isn’t done with Verizon.

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.”

Oh, snap.

Verizon’s press release on the matter is below.  Note the obvious contradictions:

Verizon Wireless Issuing Credits To Customers

Verizon Wireless values our customer relationships and we always want to do the right thing for our customers.[Ha!]

In October and November, we are notifying about 15 million customers, through their regular bill messages, that we are applying credits to their accounts due to mistaken past data charges. We will mail former customers refund checks. In most cases, these credits are in the $2 to $6 range; some will receive larger credits or refunds.

As we reviewed customer accounts, we [‘we’ meaning the FCC] 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. 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 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.

Verizon Wireless issues credits to customers from time to time based on regular review and monitoring. 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.