Verizon backs off plan to charge $2 convenience fee amid consumer backlash

December 30, 2011

Verizon backed away on Friday from plans to charge customers a $2 fee to pay their bills online or over the phone after receiving thousands of complaints, the latest victory in a wave of consumer activism that has roiled some of the nation’s largest companies.

The announcement came a day after the fee was made public. Consumer advocacy groups derided the charge as “pay-to-pay.” The fee also caught the eye of Verizon’s regulator, the Federal Communications Commission, which had said it would look into the issue. But it was individual consumers — amped up after battles this year with corporate giants such as Bank of America and Target — that the company said tipped the scale.

They roundly blasted the fee on social media sites. About three dozen people launched petitions on Change.org calling for an end to the charge, with one getting more than 100,000 signatures within a few hours.

“In many ways, corporations are more subject to the influence of consumers than politicians to voters,” said Ben Rattray, founder of Change.org, which helped fuel many of the year’s most influential consumer campaigns. “Politicians are used to a world in which half the country dislikes them. . . . Companies cannot tolerate being a public pariah. You have brand equity that is so fragile.”

The pressure from Verizon’s customers began building as soon as the fee was unveiled. The telecommunications company had planned to charge the fee to those who make one-time payments online or over the phone starting next year. The company listed several ways to avoid the charge, including enrolling in automatic bill pay or mailing a check.

But that was not enough for many customers. Lawmakers have abolished similar fees in other industries, such as the credit card business.

“At Verizon, we take great care to listen to our customers,” Dan Mead, president and chief executive of Verizon Wireless, said in a statement. “Based on their input, we believe the best path forward is to encourage customers to take advantage of the best and most efficient options, eliminating the need to institute the fee at this time.”

Verizon’s concession underscores not only the power of consumer revolt but also the growing influence of a Web site started just last year that now counts 6 million users around the world. Change.org employed 20 people at the start of the year; it now has a staff of about 90 and plans to hit 150 next year.

The site has become an incubator for a host of viral campaigns, with its staff carefully combing the more than 10,000 grass-roots petitions launched each month for causes that are generating buzz. The site’s staff then reaches out to those users to offer help, such as connecting them with decision makers or organizing strategy.

The site says it scores an average of a victory a day on issues ranging from bullying to human trafficking. But consumer advocacy has emerged as one of its top causes, and its wins are growing in size and influence.

Change.org helped spur the backlash against retailers opening on Thanksgiving Day after a Target employee protested the holiday hours on its site. Wyndham Hotels agreed to develop a new code of conduct at its properties after a Change.org petition called attention to child sex trafficking at hotels. The site culled more than 50,000 signatures to persuade 1-800-Flowers to offer fair-trade blooms on Mother’s Day.

Perhaps the biggest victory came this fall when it took on behemoth Bank of America.

The campaign started when 22-year-old District resident Molly Katchpole created a petition protesting the bank’s plan to charge $5 each month to customers who used their debit cards. Though consumers’ outrage was widespread across the Internet, it was Katchpole’s simple and direct petition that went viral. More than 300,000 people signed it, making it the largest consumer campaign ever on Change.org.

“How can you justify squeezing another $60 a year from your debit card customers?” Katchpole wrote. “This is despicable.”

Bank of America canceled the fee a few weeks later.

When Katchpole heard about Verizon’s fee Thursday night, she contacted Change.org in hopes of reprising her success. Several other consumers had launched petitions, but some included inaccurate information and the issue had yet to take off on the site, said Brianna Cayo-Cotter, Change.org’s director of communications.

Katchpole wrote the letter and, with Change.org’s permission, sent an e-mail to those who had supported her campaign against Bank of America. Change.org also featured her petition on its site and reached out to media. On Friday morning, the petition had roughly 2,000 signatures. By late afternoon, nearly 100,000 people had signed up.

“We’re trying to change the balance of power between individuals and large organizations,” Rattray said.

According to a 2009 study by the Pew Internet & American Life Project, about 32 percent of adults have signed a petition and nearly one in five Internet users have signed one online. Aaron W. Smith, senior research specialist for the project, said organizing over the Internet allows unconnected people to participate in a joint cause, eliminating the need for traditional middlemen such as lobbying or advocacy groups. It also allows people to voice their opinions on a broader range of issues.

“Protest isn’t just built around big, important global issues,” Smith said. “It’s just as easy to start up a group around the fees that my bank is charging me or the fact that my dry cleaner ripped me off.”

Ylan Q. Mui is a financial reporter at The Washington Post covering the Federal Reserve and the economy.
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