Verizon to repay customers for accidental data fees
Tuesday, October 5, 2010
Verizon Wireless is trying to make good with its customers for wrongly billing them $50 million for data services they didn't intend to use, but it still faces scrutiny from federal regulators that could expose the company to more penalties.
The Federal Communication Commission said Sunday evening that it will continue its formal investigation into Verizon Wireless data charges to explore why the nation's biggest wireless provider took so long to pay back its customers for a practice that had been occurring over more than two years. The agency could pursue fines if it determines that Verizon intentionally duped its customers into paying for services they did not request.
Analysts said that greater scrutiny by federal regulators of billing and service issues could put pressure on cable and telecom companies beyond just Verizon.
The FCC would not confirm that its investigation encompasses other carriers, but analysts said the problems of confusing billing and overcharges are industry-wide. "We see this as part of a trend of the government, and the FCC in particular, taking up consumer protection actions that in the aggregate could create some cost increases and revenue pressure," said Rebecca Arbogast, head of tech policy research at Stifel Nicholaus investment firm in the District.
The FCC will propose a regulation next week that would require cellphone makers to alert users by text message and other means when they suddenly incur greater charges and fees. A survey by the agency found that 30 million cellphone users said they experienced "bill shock," with extra charges on their monthly bills for data overcharges and other fees.
The agency has also proposed updating truth-in-billing rules that require companies to better disclose their billing practices so users understand in clear language each line-item charge.
"All of these policies need to be combined into one comprehensive policy so that consumers can finally feel like they have some control over the cellphone services they sign up for," said Joel Kelsey, a policy analyst at Free Press, a group that advocates for media and communications reform.
Verizon Wireless said Sunday that it would refund 15 million customers, or one-sixth of its subscribers, more than $50 million for erroneously charging them for Internet and other data services they didn't sign up for.
The company had said in a letter to the FCC in December that it wasn't charging customers for unintentional data services, which would include accidentally launching a Web browser.
Verizon didn't respond to questions about the FCC's continued investigation. "Questions remain as to why it took Verizon two years to reimburse its customers and why greater disclosure and other corrective actions did not come much, much sooner," said Michele Ellison, the FCC's chief of enforcement.