Verizon Pays Customers Millions for Wrongful Data Charges

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Verizon Wireless customers who were slapped with data charges even without a data plan may soon see consolatory credits or checks. Verizon has agreed to pay millions -- in tiny $2 to $6 increments -- to approximately 15 million of its customers who were wrongly charged for data sessions or mobile Internet use, the company said in a statement.

Approximately 15 million Verizon customers discovered data charges on their monthly bills, even without having subscribed to a data plan. These charges came in $1.99 increments, Verizon's standard rate for per-megabyte connectivity.

Over the next two months, Verizon plans to credit current customers' accounts between $2 and $6, and send checks to those who have since jumped ship. This payout is being called one of the largest customer refunds in history, and will cost Verizon between $30 and $90 million (although most sources are saying $50 million).

Verizon was quick to place blame on handset manufacturers. Build-in software on mobile phones -- none of which were mentioned by name -- accidentally launched Web applications, resulting in the charges. The New York Times noted that "certain flip phones sold by Verizon, a directional arrow, when pushed, automatically would initiate the phone's Web browser."

The FCC investigated Verizon's mystery data charges for over a year and, despite wondering why it took Verizon so long to fess up, is hailing the payout as a success. "We can confirm reports of an FCC investigation into mystery fees that appeared on Verizon Wireless bills costing over 15 million Americans tens of millions of dollars," FCC Bureau Chief Michele Ellison said in an e-mail statement. She added: "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 FCC said it will continue to explore Verizon's practices and may penalize the company.

Small victory, to be sure, but a sign of the FCC's diligence when it comes to investigating mobile carriers. I'm most excited about the end result to the FCC's peek into several mobile carriers' early termination fees policies. Verizon recently doubled its early termination fee to $350 from $175. AT&T followed suit, upping its own fees to the same amounts, but only for smartphones and mobile broadband-enabled netbooks -- perhaps a sign of AT&T's fright of a massive customer exodus should the iPhone switch carriers.

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