Post Tech: Verizon Wireless pays FCC $25M for years of false data charges

By Cecilia Kang
Thursday, October 28, 2010; 3:40 PM

The Federal Communications Commission said Thursday that it has reached a record $25 million settlement with Verizon Wireless over the company's wrongly charging subscribers "mystery" Internet fees over the past several years.

The payment will go to the U.S. Treasury and is the largest settlement in FCC history. The settlement also ends the FCC's 10-month investigation into overcharges at Verizon Wireless, the agency said in a news release. An FCC spokeswoman declined to comment on whether the settlement also ends the agency's other billing inquiries.

With the action, Verizon Wireless's total costs associated with false data fees reached $77.8 million, one of the largest payouts for false business practices in the communications services industry. Verizon said this month that it would refund about 15 million subscribers $52.8 million for those unwanted data charges. Verizon partly attributed the problem to a software glitch in phones.

"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," FCC Chairman Julius Genachowski said in a release. "In these rough economic times, every $1.99 counts."

Verizon Wireless said in a news release that its overcharges were "inadvertent."

"We accept responsibility for those errors, and apologize to our customers who received accidental data charges on their bills," the release said.

Genachowski said the large settlement was meant to send a signal to other communications services providers. In 2007, Univision paid the FCC a $24 million settlement for violating children's television programming rules.

And analysts say the FCC appears to be ramping up regulatory pressure on companies to protect consumers. It is exploring a proposal that requires that cellphone service provider send text and voice alerts to users as they approach monthly limits. Genachowski has indicated that he will look into regulatory fixes for the growing fines associated with breaking long-term service contracts.

"It will serve as a significant deterrent to others in the future," he said.

Verizon Wireless admitted that it had wrongly charged those subscribers a couple dollars for Internet overcharges and accidentally tripping their Web browsers. Many of those customers subscribed only to voice services and did not intend to use data services. They complained to the company and the FCC of mystery fees that appeared on their bills.

Verizon Wireless is the nation's largest wireless service provider with 90 million subscribers. The firm announced its refund amid an FCC investigation into data charges brought from complaints from consumers.

This month, the FCC began an exploration into regulations that would require cellphone service providers to alert users when they are close to going over their monthly allotted voice, text and data limits. In a survey, the agency said 30 million cellphone users said they experienced "bill shock," with extra charges on their monthly bills for data overcharges and other fees.

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