Reporter PK

FCC Orders Verizon Wireless To Refund $53 Million for Overcharges And Pay $25 Million Fine

FCC Orders Verizon Wireless To Refund $53 Million for Overcharges And Pay $25 Million Fine

Verizon Wireless has agreed to pay the U.S. Treasury $25 million on top of more than $52 million in refunds to consumers for overcharging them, the U.S. regulator said. Though this is the largest fine ever levied on a wireless carrier by the FCC and will hit Verizon’s wallet hard, the carrier would be mighty relieved that the federal investigation which began in January and brought lots of “bad press” is finally over. There seems to be no respite from carrier overcharging and billing errors, irrespective of whether you live in Canada or across the border. This makes me wonder if the federal authorities (both CRTC and FCC) are doing enough to tackle the root cause of this issue.

The FCC investigation found that Verizon overcharged 15 million “pay-as-you-go” customers by $1.99 per MB for data usage from November 2007 to the present. I find it ridiculous that Verizon charged the customers without explicit consent for accessing web apps and sites which were otherwise supposed to be free. The charges have been rightly dubbed as “Mystery Fees” as the carrier never cared to clarify why customers are being levied these charges.

“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 statement. “Today’s consent decree sends a clear message to American consumers: The FCC has got your back.”

Verizon has agreed that it will no longer charge customers the mystery fees and will launch several programs to educate customers regarding data plans and various charges in order to avoid such issues in future. Customers who have been identified by Verizon Wireless as being potentially overcharged for data usage will receive refunds or credits on their October or November bills. Customers who do not receive a refund but believe they had unauthorized data charges have a right to appeal, receive a good-faith review, and reach resolution within 30 days.

Further, the FCC settlement states that the carrier must offer data blocks to any customer who seeks to avoid data charges on his or her bill. Verizon will also create a special Data Charge Task Force and will submit periodic reports to the FCC on its refund, training and customer service initiatives.

The carrier says that it has begun the process of notifying customers who it has determined are due refunds, which range from $2 to $6. Chris Nerney at PCWorld believes that FCC’s fine on Verizon Wireless is a “$25 Million Joke” and I couldn’t agree more on that. I think Verizon has got away with murder without being penalized for the agony it caused to its “much-valued” customer community. While the FCC is trying to paint a brighter picture by publicizing that it levied a record fine on Verizon, a $25 million fine for a multibillion-dollar company is like a billionare tycoon paying for a kid’s ride in the park.

Chris brings up another interesting point which is otherwise likely to elude the general public. Though the FCC calls the “$25 Million” amount as a fine, it is in fact a voluntary payment to the U.S. Treasury and requires no admission of guilt.

Irrespective of whether Verizon levied the mystery fee on purpose or not, I believe the regulatory authorities must adopt a zero-tolerance policy towards such issues. This isn’t the first instance of carriers overcharging customers and it’s certainly not the last either. What should the federal authorities do to curb these ill practices? Are such fines going to help? Your thoughts are welcome.

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