Confused Users Keep Racking Up Ridiculous 3G Bills, Wireless Carriers Keep Helping Them

from the your-phone-bill-should-not-require-a-second-mortgage dept

Fri, Apr 23rd 2010 4:33pm — Karl Bode

We've seen no limit to stories over the years about wireless customers (including a few semi-famous ones) who wind up with fairly insane wireless broadband bills for any number of reasons. Usually the stories involve someone traveling overseas and not understanding the roaming charges and overages involved, though sometimes the users don't even need to leave port to find themselves hit with a $27,000 3G bill. The latest story of this type (via the Consumerist) involves a user getting a $7,865.84 Verizon Wireless bill after taking his Mifi portable 3G hotspot on a business trip to Tel Aviv. In this case however, the user called Verizon before the trip, studied the overage penalties, and still wound up using 350,000 kb of bandwidth before concluding it was Verizon who screwed up:

"The ugly truth is that upon investigating the issue, I found a number of things could have been done by Verizon to protect me as a consumer. They may not mention them outright, but they are there. The fact that these things were not done can only lead me to assume that Verizon would rather their consumers "understand" as little as possible about their TOS.'"

Except as a consumer, it's his responsibility to read the find print on his contract and understand the limitations and penalties of his plan. The user studied the charges, spoke with representatives -- even seemed to have at least a base understanding of what he was going to be charged per kilobyte -- and then chose to use expensive 3G data on an overseas trip anyway. Consumer responsibility and research plays a big part of the equation.

That said, we've been saying for a long time now that these bills demonstrate the fact that carriers aren't doing a particularly good job making service limits clear or educating customers. Many consumers (more than you would think) can't tell the difference between a kilobyte and a lemur, and Verizon's math skills on this front aren't always reliable to begin with. While most carriers have some kind of mechanism in place to help notify users of excessive usage, carriers haven't done a great job notifying users when their bill starts to go nuclear (like many credit card companies do when a large charge appears on your card) or making overages clear. Fortunately, carriers often agree to slash these bills -- but usually only after they receive media attention.

In the UK, where they've seen the same kind of insane 3G bills, regulators have jumped in and addressed the problem by first capping roaming charges -- but then by also requiring (as of July 1) that carriers allow users to set a monthly maximum cap that limits how much they can spend on data each month. Consumers get an automated alert as they approach 80% of that total, then their service is temporarily suspended when the user crosses the spending cap. If users don't choose a limit, a limit of $68 per month is set for them (that's only data and doesn't include voice minutes or other bill totals). Of course here in the States carriers aren't going to want to voluntarily employ tools that reduce how much money they can make off of confused users, and will fight any regulation that limits how much they can charge. So nothing changes, and story after story emerges about users whose phone bills resemble the GDP of small countries.

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Filed Under: bills, ridiculous, roaming, wireless

42 Comments

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Rose M. Welch (profile), 23 Apr 2010 @ 4:29pm

...can't tell the difference between a kilobyte and a lemur...

Hehe, you rock, Karl. Some of Techdirt's articles have been getting dry... :P
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AT&T - Customer Support, 23 Apr 2010 @ 4:36pm

All That Data is Expensive
"your-phone-bill-should-require-a-second-mortgage"

FTFY
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PC Tech, 23 Apr 2010 @ 4:38pm

Save Me from End Users
I do is PC Technical Support and I can state that the above line "Many consumers (more than you would think) can't tell the difference between a kilobyte and a lemur," is not only true it is exasperatingly accurate.

See Computer Stupidities For More Examples.
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Karl Bode (profile), 23 Apr 2010 @ 4:42pm

Re: Save Me from End Users
I read a survey (I forget where) that suggested 87% of users do not know what a gigabyte is. I believe it.

But that means if 3G/4G carriers want to impose billing systems based on usage, they're going to need to use very BIG pie charts with very colorful measurement metrics if they want it to work...

Fisher Price billing systems, so to speak. :)
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mtupper (profile), 23 Apr 2010 @ 4:54pm

mobile mafia racket
This kind of extreme charges should be illegal, its just ridiculous. It is nothing representative of the cost, not like a minute of voice-- which is already a huge margin business for the operators, but Mb of internet data? After swaps on roaming and the huge peering agreements they already have, paying anything more than cents for data usage is just silly, roaming or not! Highway robbery.
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Clippy, 23 Apr 2010 @ 5:30pm

Microsoft Phone
It looks like you are going to incur some large usage fees, would you like some help with that ?
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ChurchHatesTucker (profile), 23 Apr 2010 @ 5:33pm

Frak You
"Except as a consumer, it's his responsibility to read the find print on his contract and understand the limitations and penalties of his plan"

Yeah, why does the 'moron in a hurry' test only apply when it's going to take away my rights?
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Anonymous Coward, 23 Apr 2010 @ 6:11pm

At least 20 years ago, my cell phone was shut off without warning one afternoon, and I was advised by a recorded message to call customer service. I also was told I would have to use a different phone to make that call. I only remember the details because I was so impressed with how fast the company's fraud detection system kicked in.

A single phone call had originated from two counties over, and instantly, the cell phone company's fraud prevention system flagged this as a sign my phone had been cloned or compromised in some way. The co. gave me a new phone number and within a few hours my phone service had been turned back on. Maybe this was when mobile phone companies still cared about customer service and limiting their own financial liabilities.

Also, most of the carriers were still regional - later, this mobile phone co. and many others were bought up by the bigger companies. If they could do it then with existing technology on analog cell systems, someone tell me why mobile phone companies can't provide the same kind of fraud-prevention service for customers today.
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Anonymous Coward, 23 Apr 2010 @ 6:22pm

Except that even if you RESEARCH the charges, you still can't be sure what they'll charge you.
After the first verizon fuckup (.002 dollars vs. .002 cents) a couple people decided to try and figure out the prices for some data plans. After calling verizon 20 times and asking the same two questions, only ONE operator got both answers correct. Link here:
http://www.youtube.com/watch?v=WdKwRdWocco&feature=related
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Anonymous Coward, 23 Apr 2010 @ 6:26pm

Re:
Sorry, it wasn't 20 times. It was 56 TIMES. They polled 56 different operators.
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Anonymous Coward, 23 Apr 2010 @ 7:32pm

Regardless of who's at fault here, Verizon is more than happy to confuse/mislead customers. In the fine print of my "Unlimited" data plan is a cap of 5GB/month, with overage charges after that.

Apparently, their math skill aren't the only thing lacking...
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Jake, 23 Apr 2010 @ 7:51pm

Something else 3G operators get right over here is offering pre-pay; you pay cash up-front and when you've used up the voucher, your service cuts out until you buy another one. No monthly bill, no overuse penalty, nothing. The prices aren't great -my provider offers blocks of 1GB, 3GB and 5GB at £10, £15 and £25 respectively- but they're not being marketed as a replacement for a real broadband package anyway.
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NullOp, 23 Apr 2010 @ 8:06pm

User Agreements
This behavior on part of cell phone companies should simply be illegal. The basic rule is charge what the traffic will bear. Our government helps them commit robbery by not instituting controls on these companies. Next election, unelect the incumbents!
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Anonymous Coward, 23 Apr 2010 @ 11:40pm

the issue isnt high 3g bills it is consumers not understanding and not taking the time to understand roaming. the other issue is not the rates that are charged for data normally but what is charged for someone who is 'out of system' and roaming. the bills are too high but both sides are too blame. just laying it on the service provides isnt right.
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lens42 (profile), 24 Apr 2010 @ 12:22am

How can a company that sells to consumers think they are helping themselves with these charges? How much fine print parsing is a cell-phone customer supposed to do? I prefer to deal with companies that don't require me to constantly watch my back. If you get a $27,0000 bill, the real cost to Verizon is probably a few percent of that.

Just think how attractive a carrier would be if they said, "Go ahead and do whatever you want, and we will automatically put you on the best price package for that billing month". Then I wouldn't have to worry about getting ripped off. I'd still be discouraged from hogging data because I'd still have to pay, but I wouldn't then be forced to guess about what I'm going to need next month, and they'd sell MORE that way because customer like me wouldn't just turn OFF data when traveling for fear of a $10,000 bill.

The current system of making people predict their future needs is idiotic, makes consumers constantly worry about getting screwed, and puts the carriers in an unnecessarily adversarial relationship with their customers. You'd think somebody would break ranks and bill sensibly.
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Victor, 24 Apr 2010 @ 12:59am

Re: mobile mafia racket
Except carriers have to pay a premium to other companies when one of their clients is using another network. Which is why roaming charges can be so astronomical. I repeatedly get 800-1000$ cell phone bills, due to the fact I use my Canadian phone while I work here in Bosnia and Rogers(My Canadian provider) has to pay BH Telecom (the local provider here) money for me to use the network.
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smerff, 24 Apr 2010 @ 2:27am

cept t-mobile
"Of course here in the States carriers aren't going to want to voluntarily employ tools that reduce how much money they can make off of confused users, and will fight any regulation that limits how much they can charge. So nothing changes, and story after story emerges about users whose phone bills resemble the GDP of small countries."

As of yesterday (04/23/10) T-mobile (us) only has one data plan that would allow any overage what-so-ever and that is capped at $50 no matter how high you go. Including data plans for regular phones, smartphones, and data sticks. At worst with a smartphone or a datastick you will simply be throttled back speed-wise until your new billing period starts. With regular phones they charge $1.99 per meg, and after every time you use the web you will get a message letting you know how much you've used, and point you in the direction of an unlimited plan if you break $10.
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Don Speekingleesh (profile), 24 Apr 2010 @ 4:23am

The EU introduced the caps, not the UK (though it obviously applies to UK operators.
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Cynyr (profile), 24 Apr 2010 @ 7:39am

Re:
not all firmwares show roaming well, and some prefer the roaming tower. Also a large number of phones have no way to turn off connecting to roaming towers.
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Cynyr (profile), 24 Apr 2010 @ 7:55am

Except as a consumer, it's his responsibility to read the find print on his contract and understand the limitations and penalties of his plan. The user studied the charges, spoke with representatives -- even seemed to have at least a base understanding of what he was going to be charged per kilobyte -- and then chose to use expensive 3G data on an overseas trip anyway. Consumer responsibility and research plays a big part of the equation. maybe if the contract was required to be written in English that someone without a contract law degree/schooling could understand. as for still using it overseas i think that was part of the point, even though he knew what it would cost, the device/network doesn't always provide proper tools to manage data use. A while ago, i knew some carriers, in the USA, even charged for simply connecting to a tower that was "roaming". 350MB is a few 720P youtube videos.
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Hugh Mann (profile), 24 Apr 2010 @ 8:53am

At least provide a reliable tool so I can see the usage...
I travel abroad frequently, and have been hit with several large mobile bills (mostly for data).

I actually understand that it's my responsibility to understand the usage charges, and I took steps to reduce my data usage while traveling. However, the bills always seemed to be much higher than I expected. I would sometimes get a call or text message from my provider, warning me that my usage seemed high - but this didn't come until my running bill had hit a figure that was four to five times my normal bill.

I spoke with a customer service rep, and asked for two things:

1. the ability to set my own limit for when they should call me about extreme bills, and

2. a tool that keeps a running tally of my data usage, so I can see for myself when to turn the data connection off.

My provider was not able to provide either of these things, especially in the case of $2, because there is apparently often a lag of up to several days in reporting data usage while roaming internationally.

Why this should be the case ten years into the 21st Century is beyond me.

On the data "counting" tool, there are lots of kilobytes zipping back and forth that you can't see. I can see an email, and how big it is. However, I don't know how many kbs were involved in setting up the connection, inquiring, logging out, etc., etc., etc. - all those "background" processes. I don't doubt that they use kbs, too, I just can't "see" them, so they don't show up in my own tallies.

I think there are third-party tools availble for this, but it really seems a good service provider would provide at least SOME rudimentary way for its customers to track their usage.

HM
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innocent geek, 24 Apr 2010 @ 9:54am

Re: Re: Save Me from End Users
How many lemurs make one MB (that's one mega byte)? My little brothers says, it's the amount of download you can do in one second if you can go berserk on 1 gig fiber connection.

Is it something like San Francisco is seven hours from Los Angeles? (As if miles wasn't weird enough!)
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Derek Kerton (profile), 24 Apr 2010 @ 10:01am

Re: Re: Re: Save Me from End Users
How many Quatloos to one lemur?
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Derek Kerton (profile), 24 Apr 2010 @ 10:06am

Re:
"Maybe this was when mobile phone companies still cared about customer service and limiting their own financial liabilities"

No, it has nothing to do with customer service. This is most definitely because in the case of cloning (which happened much more before the upgrade to digital (1995-97), the carriers themselves bore the cost of fraudulent calls. They shut off your phone to save themselves money. It would have been more convenient for you if they didn't shut off your line until you received a replacement. But it wasn't about helping you.

But your case is instructive. We see how quickly they can react to an anomaly situation. Apparently that haste doesn't apply when the moral suasion of increased revenues is at play. 20 years later, the carriers find it too difficult to put in an early warning system, like Karl mentioned.
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Derek Kerton (profile), 24 Apr 2010 @ 10:12am

Re: All That Data is Expensive
"All that data is expensive?"

Just how expensive? Well, when you roam, the rate you pay for voice is about 16x what you would pay at home. Let's accept that it costs slightly more to serve a roaming customer, so a slight premium is acceptable -- but 16x is too high. It was enough to induce regulation by the EU telecom regulator, Vivianne Redding, but non Europeans are still screwed.

Now let's consider data: a kilobyte of data, when an American is in Europe, costs 341,300% of what that kilobyte costs in the USA!!!!!!

Does a 3,413x markup sound a bit extreme? I did the calculations on this in this article:

http://www.rcrwireless.com/ARTICLE/20100224/OPINION/100229982/analyst-angle-roaming-rate -rage

Where I write, "Honestly, it goes far, far beyond the pale. If there is competition in the cellular industry, it certainly doesn't seem to be in international roaming."
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Derek Kerton (profile), 24 Apr 2010 @ 10:19am

Re:
Yeah, those prices may seem a little high. But when I roam from AT&T to the UK, I pay $2,097 for 5GB.

Makes 25 quid seem OK.

Of course, that is only if I don't think ahead and subscribe to a special roamer data plan, but that is the behavior many travelers exhibit, not knowing any better.
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Derek Kerton (profile), 24 Apr 2010 @ 10:25am

Re: Re:
For those of you who prefer the whole story, if you DID subscribe to an international roaming data plan, say AT&T's 20MB for $20 plan, then you would pay "just" .0005 per Kb overage after 20MB.

This would mean that 5GB runs you approximately $540.

Oh, yeah. That's much more reasonable. [sarc]

Most carriers in the world have similar pricing models.
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Derek Kerton (profile), 24 Apr 2010 @ 10:30am

Re:
Not so. Carriers explain it poorly, communicate poorly, and sell people smartphones that sip data constantly, whether or not the customer actually even touches the phone.

Further, the telco should understand the telco business, the details of roaming, etc. But the subscriber should not need to. They should be able to use the service with the expectation that if they are getting overcharged, it is not by three orders of magnitude.

Data roaming rates are 3413 times the domestic data rates, so I think the blame is not evenly distributed between telco and subscriber.
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Derek Kerton (profile), 24 Apr 2010 @ 10:42am

Re: cept t-mobile
Um. Yeah. Um...No, wrong.

If you read a few words of the article, you'd see we're talking about international roaming here. T-Mobile has charges much like the other US carriers.

"With T-Mobile Internet, you can access the Internet from locations around the globe—for $10.24 per MB in Canada and $15.36 per MB in other countries. Charges will vary depending upon the amount of data you send and receive, and/or the amount of data you download"

from:
http://www.t-mobile.com/Business/Information.aspx?tp=Bus_Tab_InternationalServic es&tsp=Bus_Sub_InlRoaming

Hey, that's only $102,400 for 5GB in "other countries". Awesome deal! [epic sarc]

T-Mo has this nice little video that shows users how to turn off data services so they don't get screwed while abroad:

http://support.t-mobile.com/videos.html?autoplay=Data_Sync_v1.flv

Nice of them to offer the vid, but it's safe to assume that very few customers dig up this kind of information before they travel.

It's sad that it's necessary for users to deactivate the usefulness of their mobile data devices during the very times (travel away from your home and office PC) that we would need them most.
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Derek Kerton (profile), 24 Apr 2010 @ 10:49am

Re: Re: Re:
I'm quite sorry. Decimal error.

I used the price per Kb of
$0.002/Kb when actually the AT&T rate is $0.0195/Kb now.

http://www.wireless.att.com/travelguide/coverage/coverage_details.jsp?MNC=CING&CIDL=250& amp;dropFormChoice=1.29;0.99;250&product1rate=$1.29&product2rate=$0.99&x=52&y=7

T hus, I UNDERSTATED the costs in the two comments above by a factor of 10.

If I go to the EU, without a discounted plan, for 5GB, I would pay $20,447.23.

If I was in the EU with the 20MB for $20 plan, I would ONLY pay $20,385.

Awesome deal. Let's roam! I'm packing my bags right now!!
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Derek Kerton (profile), 24 Apr 2010 @ 10:53am

Re: At least provide a reliable tool so I can see the usage...
Extending your point about background processes, there is much more than the "overhead" data when you are actively using your email.

Consider things like the iPhone's visual voicemail. That is a data service, and you are charged data roaming rates for the media file that carries your voicemail message. This happens whether you request that data or not.
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Steve R. (profile), 24 Apr 2010 @ 11:17am

The Freedom to Innovate
Many companies whine, regulation will have the unintended consequence of killing innovation and our ability to provide services that the consumer wants. So I guess, in this case, innovation is the cherished freedom to confuse and overcharge the consumer. Seems to me that the unintended consequence of the freedom from regulation translates into a license to "steal".

Whatever happened to the concept of corporate self-constraint? No one is forcing these companies to implement these excessive charges.
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AnonCow, 24 Apr 2010 @ 11:22am

I'll bet that every single one of the customers that were hit with a massive roaming data plan bill had an "UNLIMITED" data plan...
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Griff (profile), 24 Apr 2010 @ 12:17pm

How to roam in UK when travelling from US
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Griff (profile), 24 Apr 2010 @ 12:27pm

Re: How to roam in UK when travelling from US
Voice

1. Go to carphone warehouse in UK and buy a "pay as you go" handset. Mine was £15 including £10 talk time (yes, £5 for a handset, no contract) and it came with UK charger and also a USB charger that can be used to charge it up before you get to the UK. Talk time never expires, what you don't use this trip, save till next trip. Only a triband (no good in US) but hey, it's cheap.

2. When in UK, make all calls using this UK phone. But get a SkypeToGo number for calls out of UK (ie back to US)

3. For incoming calls, either leave a message on your US cell giving out the UK number, or leave a message saying "send me an SMS".

Data

4. Need data on your phone ? If you REALLY do, look for a UK PAYG data plan and a different UK handset. But if you can live with just getting your netbook onto a dataplan, get a PAYG "mobile broadband" from "3 telecom". £10 for 1GB which expires after 30 days, which works over most of Britain and plugs into USB. You might only get 1Mbit/s but you'll be connected with a cap on the spend.

If this seems like a lot of effort, then just go on paying $1000+ each trip instead.
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Clive Hanuschak, 24 Apr 2010 @ 4:43pm

Data charges in Canada
A similar situation in Canada exists. When ROGERS came out with one of their first USB modem products, I signed up. The first month was supposed to be "unlimited," and I ventured on a cross-country trip. A month later I got a bill for nearly $6,000 and it took 3 months for ROGERS to fix their mistake. Needless to say I will never, ever use Rogers again or any data plans. They make the TOS and pricing impossible to figure out, and just try and talk to a customer service agent to understand it. Of course, their billing systems work flawlessly, but they cannot explain to a customer what they are being charged for.
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Bradley Stewart, 24 Apr 2010 @ 5:55pm

When I Began Working
it was in the mid 60s. Any company that I worked for had a philosophy of really and I know now that it is hard to believe now doing the best for their customers. Though I don't find anything wrong with it the first time that I noticed a change was many years later when these company's began keeping much longer hours and opening on Sundays. Then came the sales quotas. I just hated the sales quotas. They were just plain wrong. The sales force hated them and the customers hated them even more because they knew exactly what was happening. Well now I am retired. Good thing too. I was probably just months away from bashing my last bosses brain in with his Best Practices Paperweight. I am sure I would have gotten written up for that.
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Peet McKimmie (profile), 25 Apr 2010 @ 12:43am

Typo
"Except as a consumer, it's his responsibility to read the find print on his contract ..." It's a bit rich complaining that people don't read the screenfuls of legalese that comes with a product when you don't even read your own article properly.
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jd2112 (profile), 25 Apr 2010 @ 7:09pm

Re: User Agreements
It won't work. The telcos give money to both sides.
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Anonymous Coward, 26 Apr 2010 @ 5:19pm

Unless the courts start absolving people of these ridiculous bills, it's not in the Telcos best interest to make sure you understand everything.
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Martin O'B (profile), 18 May 2010 @ 6:38am

Re:
I find that both hilarious and terrifying. I just got smart phones for my wife & I. Looking at my account on the Verizon Wireless page, a little widget shows my data usage as:

286,626.95 of Unlimited data used.

First of all, what units are they measuring my data in?
Second, how can it be unlimited if there is a limit?

There's not even a little star next to Unlimited telling you to read your contract! If I look at that (as a new data plan customer), why would it even occur to me to look into the fine print in my contract for any info on my data plan's limit when the main account info page says UNLIMITED?
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Justina, 23 Jun 2010 @ 4:26pm

NET10 saves - forget 3G
OK, maybe I'm sheltered or maybe I'm just not keeping up with the times, but did you ever think that you're the one's getting yourself in trouble. Unless it's totally necessary for your job to connect w/ 3G, perhaps you should be keeping away from the cell phone while out of the US. If you're on vacation, just enjoy and disconnect. If going abroad you should probably just leave a NET10 prepaid phone behind to have your loved ones contact you as needed. Rates are just 15 cents a minute to over 100 countries so even if they call you everyday, it won't leave a whole in your pocket. The phone is great quality, can be bought in just about any discount store and already comes w/ a month worth of minutes for as low as $9. No surprises, no contract fees, no 3G fees, totally carefree!!!!
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