Verizon to pay up to $90M in data refunds

Verizon Wireless (NYSE:VZ) said it will pay up to $90 million to around 15 million customers as part of a massive refund program. The customers were mistakenly charged for accessing the Internet on their devices, the company said in a statement.      

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 that current customers will receive credits of between $2 and $6 in their October or November bills and former customers will receive refund checks. 

The refund comes nearly five months after the FCC opened up an inquiry into "bill shock." The agency was looking into whether wireless carriers should be required to warn subscribers when they are incurring roaming charges or overage fees. In a statement, Verizon said that the refunds will go to customers who did not have a mobile data plan but were still charged because of software on devices that initiated data exchanges or because of inadvertent Internet access. 

After Verizon issued a statement on the refund, the FCC confirmed that it has been conducting an investigation into the inadvertent data charges. Michele Ellison, the FCC Enforcement Bureau Chief, said in a statement that the FCC began looking into the issue 10 months ago.

"We're gratified to see Verizon agree to finally repay its customers," Ellison said in a statement. "But questions remain as to why it took Verizon two years to reimburse its customers and why greater disclosure and other corrective actions did not come much, much sooner. The Enforcement Bureau will continue to explore these issues, including the possibility of additional penalties, to ensure that all companies prioritize the interests of consumers when billing problems occur."

Verizon's announcement is a significant turnaround for the company. In comments made to the FCC last 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."

The company said in its comments that certain devices can be programmed to remove (or add) the browser link from the main menu of a device "but this option is not available on all mobile Web-capable devices." Verizon said most devices have features in which users can lock their screens, and that a data block can be applied when a customers buys a device and a mobile Web block can be applied online.   

The issue came to light in the summer of 2009 after a column in the Cleveland Plain Dealer about the issue spurred the newspaper's readers to send in their own complaints of being charged $1.99 for data usage they said they did not use. According to the paper, in some cases "customers were charged when their phones were off, the batteries were dead, the phone's Internet access was blocked or even when the phones didn't have the software to go online."   

For more:
- see this Verizon release
- see this FCC release
- see this NYT article
- see this WSJ article (sub. req.)

Related Articles:
FCC opening inquiry into wireless 'bill shock'
Verizon defends ETF, data usage fee policies
Verizon to refund customers for mistaken data charges

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