When David Rubenstein saw Verizon Online's high-speed DSL service advertised in early April for $29.95 a month, he signed on thinking it's a good deal.
But last month, Verizon sent its 2.7 million DSL subscribers a notice by e-mail and in their May bills that angered Rubenstein and some other customers. Verizon announced it was tagging on a $2.95 monthly fee.
"Verizon sets a price for DSL, makes me sign a contract agreeing to use their service at this set price . . . and then raises the price by 10 percent by calling it a fee -- not a change in price," says Rubenstein, a District resident.
It's not the amount that bothers Rubenstein as much as Verizon not making it clear a fee would be added. "It is dishonest to sell me something for $30 and charge me $33," he says.
Verizon calls the additional charge a Supplier Federal Universal Service Fund (FUSF) Recovery Fee. Other telecommunications companies call it other names -- such as FUSF Pass-Through Fee or Federal Programs Cost Recovery Fee.
Federal regulations require the big telecommunications suppliers to contribute funds to the Federal Universal Service Fund to defray costs of increasing Internet access at libraries and other public places and of advancing online availability to low-income and rural Internet users. The amount is set quarterly by the Federal Communications Commission.
By law, those suppliers are allowed to pass along the charges to service providers such as Verizon Online and other DSL companies. Many of those broadband providers are now charging their customers the fees as separate line items in their bills. Customers often mistake them for "some sort of federal tax," as one online complaint put it. They're not. And the feds do not require DSL providers to charge their customers the fee as they do taxes.
Rubenstein contends that the FUSF fee is just another cost of doing business for Verizon. He thinks such add-on fees are incognito price hikes enabling companies to advertise their services at one price and charge another.
When he signed up on Verizon's Web site, he says, the $29.95 price was advertised in big red letters, but he saw no mention of the FUSF fee. "It certainly wasn't included in the area that was bragging about their low price," he says.
Verizon Communications spokeswoman Bobbi Henson says Verizon has held out longer than most DSL providers from passing the FUSF fee on to its customers.
"This was a business decision. We had absorbed this fee for years and it has significantly increased over time," she says, adding that from 2002 to 2003 the FCC more than doubled the fee. "We have broken this recovery fee out on customers' bills because it is not for the Internet access service we provide."
Henson says that while the government doesn't require Verizon to charge customers the FUSF fee, it does allow Verizon to do so. Since adding the fee to bills, Verizon has received calls from "about 100 customers," she says. And Verizon has now added "USF recovery fees and applicable taxes apply" to the information below the price on the online ad.
"By Verizon's logic," says Rubenstein, "it would be reasonable to add a fee to cover their cost of electricity, or health care for their employees, or bonuses for their executives."
Maryland Attorney General J. Joseph Curran Jr. warned consumers last week about a telemarketing scam that offers $200 of "gas coupons" in exchange for a shipping and handling fee of $2 or $3. To debit the fee, the scammers ask for the consumer's bank account or credit card number.
Those suckered by the scam receive no gas coupons and find unauthorized charges -- sometimes hundreds of dollars -- on their accounts. Curran warns: "Never give your bank account or credit card number over the phone to persons whom you do not know."
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