Verizon Wireless Fined $25 Million For Bogus Fees... But May Have Still Made Out Profitably

from the doing-the-math dept

A few weeks back, Verizon finally admitted what the press had reported for years (and which Verizon Wireless had denied for years): that it had erroneously charged 15 million customers $1.99/month fees for supposedly accessing data on their phones, even though many had specifically declined to allow data services on their phones. At the time, Verizon Wireless said it would pay back "up to $90 million." The FCC noted that it wasn't satisfied with this response, and now it's come out that Verizon Wireless will also pay a $25 million fine to the federal government over these actions. That's separate from paying back customers, but the amount Verizon Wireless will have to pay seems to be shrinking. The original report was "up to" $90 million, but now people are saying "a minimum" of $50 million in refunds. So, it's still possible it'll pay $90 million in refunds, but it seems unlikely.

Of course, as Broadband Reports points out, something in the math doesn't make sense. This apparently went on for 2 to 3 years and impacted 15 million customers. While not every customer was charged the fee every month, many claim they did see it pretty much every month. So, start doing the math. Even if we assume that, say, one third of the users saw it every month for just one year and the rest saw it only once, we're already talking $90 million. But if it's true that many of them saw it for multiple years, and even if you throw in the $25 million fine, it sounds like Verizon Wireless could come out ahead in the end... Oh, and in case you were wondering, Karl Bode confirmed that no one at the FCC audited Verizon Wireless's estimates for how many people were charged this fee, so it's going on faith that Verizon Wireless -- who for years denied this fee existed -- is telling the truth about how many times it was charged.

Filed Under: fees, fine
Companies: fcc, verizon wireless