Verizon to pay $25M in settlement with FCC over mistaken data charges

Verizon Wireless (NYSE:VZ) and the FCC reached a record $25 million settlement for the wireless carrier mistakenly charging millions of customers for mobile data usage, the commission said in a statement.

The settlement, which will be paid to the U.S. Treasury, is the largest in the FCC's history--and comes at the end of the commission's 10-month investigation into the data charges. Verizon has separately agreed to pay more than 15 million subscribers a total of $52.8 million.

Verizon received numerous complaints last year from customers who said they were charged $1.99 for mobile broadband access that they did not use. The company said earlier this month that current customers will receive credits of between $2 and $6 in their October or November bills, and former customers will receive refund checks.

FCC Chairman Julius Genachowski said in a statement that the settlement "is an important recognition of the harmful impact on consumers" and "will serve as a significant deterrent to others in the future." He also said the settlement includes FCC oversight and accountability measures to ensure that Verizon fully refunds customers and puts new customer service measures in place.

The settlement highlights an about-face by Verizon. In comments made to the FCC in December, Verizon defended its stance on the issue, and said that a minimum usage fee of $1.99 applies only "when a customer launches the Internet browser and then navigates away from the default mobile Web homepage to sites other than a Verizon Wireless customer care site. Usage fees are not charged when a customer simply launches the Internet browser and lands on the Verizon Wireless mobile Web homepage, which is the default setting."

In a statement, Verizon said the charges affected customers who did not have data plans and chose to pay for data usage on a per megabyte basis. The carrier said the biggest problem involved "a very small data 'acknowledgment' session sent by software pre-loaded on certain phones." This triggered the $1.99 charges. In other cases, Verizon accidentally charged customers for access to website links that were not supposed to trigger data charges.

Verizon said it has put in place improvements to resolve issues that caused the charges and that it is changing software on future devices to remove acknowledgments and prevent them from triggering the small data "acknowledgment" sessions.

In a related move, the FCC voted earlier this month to explore whether to require wireless carriers to provide usage alerts and related information to subscribers as part of an effort to help wireless users avoid unexpectedly high wireless bills.

For more:

- see this FCC release
- see this Verizon release
- see this Washington Post article

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