The Federal Communications Commission announced on Thursday, October 28, 2010 that it had reached a record settlement with Verizon Wireless over the telecommunications giant’s so-called “mystery fees.” Verizon has agreed to pay a staggering $25 million to the U.S. Treasury and will refund $52.8 million to approximately 15 million customers for wrongfully charging customers over the last three years. This is the largest settlement payment in FCC history.
The FCC’s Enforcement Bureau began its investigation of the mystery fees in January 2010. The focus of the investigation was on unexplained “pay-as-you-go” data fees charged to Verizon Wireless customers that are not subscribed to a data package or plan. Beginning in November 2007, Verizon erroneously charged $1.99 per megabyte for data sessions that customers did not intend to initiate. For example, customers not signed up for data service were charged when they accidentally pushed buttons that opened the web browser capabilities on their phones. Data sessions were also initiated by phone applications that automatically accessed the Internet without the customer’s knowledge.
In addition to paying the settlement fees, Verizon has promised to provide greater consumer protections in the future. The company has promised to cease charging the contested fees and has vowed that no more “mystery fees” will be charged in the future. Verizon will also allow customers to set up data blocks on their phones so that they will not be charged for any unintended access to the Internet. Finally, Verizon must improve its customer services by explaining the pay-as-you-go option in plain language and offering tutorials that help customers understand their bills.
Verizon must begin its repayment to customers immediately. The FCC notes that the repayment is not capped at $52.8 million. Customers that do not receive a refund but believe that they were wrongfully charged for data services have a right to appeal to Verizon.
The FCC is now investigating other complaints relating to Verizon as well as looking into the practices of other mobile providers. This is a big step forward for consumer protection in the mobile phone industry. With the increased capabilities offered by mobile devices, service providers will have the burden of explaining the fees and billing related to these new services. Consumers will also have an incentive to check their bills for other “mystery fees” now that they know refunds are possible.