Despite An FCC Consent Agreement, Verizon Wireless Failed to Refund Hundreds Of Millions Of Dollars It Improperly Collected From Customers For Phony Data Charges.



July 2, 2013

Contact:  Arthur V. Belendiuk           Phone: 202 363-4559


Despite An FCC Consent Agreement, Verizon Wireless Failed to Refund Hundreds Of Millions Of Dollars It Improperly Collected From Customers For Phony Data Charges.


Through the Freedom of Information Act, Smithwick & Belendiuk, P.C. has discovered that the 2010 Consent Decree between the FCC's Enforcement Bureau and Verizon Wireless was woefully inadequate to reimburse the 15 million customers who were wrongly billed $1.99 data charges from 2007 to 2010 on their cell phones.  At the time the FCC hailed the Consent Decree as the largest payment to date by a telecommunications provider under investigation for violations of the Communications Act. Verizon Wireless agreed to make a complete refund to overcharged customers, which it calculated to be $52.8 million and further to make a "voluntary contribution" to the United States Treasury of $25 million.  The FCC's Enforcement Bureau did not verify Verizon Wireless's representation that $52.8 million represented a full refund.  Evidence discovered through a Freedom of Information Act lawsuit reveals that the overcharging may be greater than 300 million dollars, and certainly is substantially more than the $52.8 million Verizon Wireless agreed to repay. 

The Enforcement Bureau conducted its investigation behind closed doors, withholding from the public its two letters of inquiry and numerous responses by Verizon Wireless.  A Freedom of Information Act request was filed in late 2010 seeking these materials.  In response, the FCC produced 111 pages of documents that had been so heavily redacted by Verizon Wireless as to be useless, and refused to disclose the letters of inquiry.  Repeated attempts to convince the FCC to disclose the material failed and a lawsuit was filed under FOIA in Federal District Court for the District of Columbia in April 2012.  Ultimately the case settled and the FCC and Verizon Wireless provided the requested documents in March 2013.  This two and a half year legal process is a vivid example of the FCC subjugating the public's right to know under the law to the interests of its largest regulated companies.

More importantly, the disclosed documents reveal that Verizon Wireless was aware of the overcharges at the same time as it was denying the problem to complaining customers and it was representing under oath to the FCC that the data charges were legitimate and proper.   

Furthermore, the disclosed documents reveal Verizon Wireless revenue figures and internal reports on the extent of the overcharging, which show that the $52.8 million refund was only a small fraction of the wrongful charges.

 It appears from the new material that the overcharging of customers totaled approximately 300 million dollars, rather than the $52.8 million that Verizon Wireless represented to the public and the FCC was a "full refund."

Internal emails obtained as part of the FOIA settlement reveal that after press reports brought the phony charges to the attention of the public in mid-2009 Verizon Wireless began looking for a fix at the highest corporate levels.  Verizon Wireless's internal analysis recommended a 300kb monthly data allowance to customers as a means of mitigating the erroneous charges, but Verizon Wireless would be "forfeiting" about $10 million a month in revenues, so the 300kb monthly allowance was never instituted.  Instead, in September 2009 the company implemented a mere 50kb allowance on a temporary basis.

Smithwick & Belendiuk, P.C. is filing today a Petition for Investigation, asking The FCC's Inspector General to investigate the circumstances of this case, including the adequacy of the refund; misrepresentations to the FCC by Verizon Wireless; and the conduct of the Enforcement Bureau in investigating and resolving the matter.