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Verizon Wireless pays $25M to end FCC fee probe

By Stacy Cowley, tech editor


NEW YORK (CNNMoney.com) -- Verizon Wireless has agreed to pay $25 million to the government to settle an investigation of the "mystery fees" it improperly charged millions of customers for data sessions they never intended to launch, the Federal Communications Commission said Thursday.

The "voluntary payment," which the FCC said is its largest on record, comes on top of the refunds Verizon plans to issue to around 15 million customers, as it announced earlier this month. Those refunds will total at least $52.8 million, the FCC said.

"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 prepared statement.

"I am gratified by the cooperation of the Verizon Wireless team in the face of these issues, and pleased they are taking the high road," Ellison added.

The FCC began investigating Verizon Wireless in January after years of customer complaints about unexplained data charges showing up on their bills. Customers without data plans were assessed "pay as you go" fees of $1.99 per megabyte for data they accidentally or unknowingly downloaded.

Games and other applications sometimes initiated the transfer, and Verizon's own mobile webpage occasionally invoked data charges when customers followed links that were intended to be free.

Verizon plans to reimburse current customers who were improperly charged through credits on their upcoming bills. In most cases, the credits will run between $2 and $6, though some customers will receive larger refunds.

Former customers can expect to receive a refund check in the mail. Customers who do not receive a refund but think they were overcharged will be able to appeal, and the FCC says each case will be reviewed and resolved within 30 days.

Verizon's $25 million payment to the U.S. Treasury is part of a settlement that ends the FCC's 10-month investigation.

"Today's consent decree sends a clear message to American consumers: The FCC has got your back," FCC Chairman Julius Genachowski said in a written statement. "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."

In addition to issuing refunds, Verizon has agreed to make several changes intended to protect consumers. It promised to take steps to prevent future unauthorized data charges, offer plainly worded explanations of its "pay as you go" data plans, and create a Data Charge Task Force of customer-service workers trained to monitor and respond to data-charge complaints. That task force will issue regular reports to the FCC.

Verizon also said it is changing the software it installs on its phones to prevent it from launching accidental data sessions.

"Internal billing processes can be complex and, in this case, we made inadvertent billing mistakes," Verizon Wireless said in a statement responding to the FCC settlement. "We accept responsibility for those errors, and apologize to our customers who received accidental data charges on their bills. "

Verizon Wireless is a joint venture of Verizon (VZ, Fortune 500) and British telecom Vodafone (VOD).

"We will continue to monitor the company's compliance going forward," the FCC's Ellison said. "We salute the consumers who had the tenacity to call attention to this problem." To top of page

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