FCC Fines Verizon $25M for Mystery Fees


The FCC proved it does indeed have consumer’s backs by handing out a $25 million fine, the largest ever, to Verizon (s vz) for charging its customers spurious fees over a period of years. The fine was the result of a 10-month investigation into the carrier’s billing practices, and is in addition to a minimum of $52.8 million in refunds Verizon must make to the 15 million customers affected.

The investigation determined Verizon regularly allowed data connections on phones to generate $1.99 per minute charges even though the customer did not intentionally start the connections. The agency also took offense at Verizon’s charging data fees for web sites promoted to be “free of charge”, including the carrier’s own Mobile Web homepage. Verizon has also been ordered to allow customers to request a data block on phones to avoid unintentional charges.

Verizon had recently volunteered to refund charges it determined to be spurious, and now has been ordered by the FCC decision to form a Data Charge Task Force to monitor charges going forward to prevent improper fees to customers. The task force will report regularly to the FCC to make sure the carrier remains in compliance with the order.

FCC Chairman Julius Genachowski made the following statement about the findings:

Today’s consent decree sends a clear message to American consumers: The FCC has got your back. 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. In these rough economic times, every $1.99 counts.

Maybe now the FCC will go after Verizon or AT&T (s T) next on their recent increase in early termination fees for smartphones.

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The FCC sure as hell didn’t cover my back when my service provider breached it’s contract, or is the FCC chairman only interested in scandals that go beyond 6 figures??? Nice to know the court system in this country still works, however – I won my case.


Can’t say I see an issue with the ETF increase. I have had cell phones in the past, and I have always read the fine print and determined that the ETF was a reasonable accommodation for getting a phone for far less than it was worth.

Should the ETF on a smartphone and a basic feature phone be the same? No. The tel-cos are shelling out far more for that smartphone and “selling” it at a loss. The ETF just allows them to make sure that they recover that loss in future revenue.

And by providing a declining ETF as several of the tel-cos have started doing, they are being more honest about the declining risk they see as the contract life is expended. That said, if you have a $350 ETF on a 24 month contract, the ETF after month 23 should be less than $20, which I do not believe is the case with Verizon.

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