Verizon Wireless to pay record fine for 'mystery' charges

Verizon Wireless has agreed to pay a record $25 million fine to settle allegations from the FCC that the wireless provider erroneously billed millions of customers for unexplained data charges.

The settlement, the largest voluntary consent decree fine imposed by the agency, was announced after a 10-month investigation by the FCC's Enforcement Bureau into complaints from Verizon Wireless customers over "mystery" charges. The FCC said the company would provide a minimum $52.8 million in refunds to about 15 million customers.

The FCC probe focused on "pay-as-you-go" customers, who do not have data plans, and involved $1.99 per-megabyte data charges. The FCC said these fees were imposed erroneously for such actions as unauthorized data transfers initiated by applications, such as games, built into some phones; accessing some Web links that were supposed to be free; and unsuccessful attempts to access data.

"People shouldn't find mystery fees when they open their phone bills -- and they certainly shouldn't have to pay for services they didn't want and didn't use," FCC Chairman Julius Genachowski said in a statement. "I am pleased that Verizon Wireless is now taking the appropriate steps to repay 15 million consumers a minimum of [$52.8] million dollars. Their $25 million payment to the U.S. Treasury -- the largest in FCC history -- is an important recognition of the harmful impact on consumers. It will serve as a significant deterrent to others in the future."

Earlier this month, Verizon Wireless announced that it would provide refunds or credits to customers for the mystery charges identified by the FCC. In addition to the refunds, the company also has agreed to take several other steps including stop charging its customers incorrect fees and take "affirmative steps" to prevent future unauthorized charges.

Verizon Wireless also has agreed to allow customers to place data blocks on their accounts so they will not incur data charges; launch several new initiatives to improve its customer service including providing "plain-language" explanations of its pay-as-you-go data charges and its data plans; and provide the FCC with updates on its efforts to address the problems identified by the commission's probe.

"Verizon Wireless works very hard to simplify the wireless experience for customers and to ensure that customer bills are accurate," the company said in a statement. "Nonetheless, internal billing processes can be complex and, in this case, we made inadvertent billing mistakes. We accept responsibility for those errors, and apologize to our customers who received accidental data charges on their bills."

The company noted that the biggest source of the erroneous charges related to those customers without data plans who accessed pre-loaded applications on certain phones, which triggered a pay-as-you-go data charge of $1.99. "We never intended to charge customers for this 'acknowledgment' data session," the company said.