To end a 10-month inquiry by the Federal Communications Commission into mystery data charges on millions of customers' bills, Verizon Wireless agreed Thursday to refund $52.8 million, pay the government $25 million, and make changes to avoid similar overcharges in the future.
Verizon Wireless promised earlier this month to refund an estimated $50 million to about 15 million customers for what it says were "accidental data charges." Under the deal announced Thursday, the carrier said it would refund at least the $52.8 million via credits on October and November bills, and would continue to review complaints about unfair charges that may date back as far as November 2007.
Verizon Wireless said it had already taken steps to fix the problem - including applying an automatic credit for the first 50 kilobytes of data each month, a step it took in September 2009, several months before it was first contacted by the FCC.
"In no instance did Verizon Wireless intentionally engage in improper billing practices," said spokesman Tom Pica.
Complaints to Verizon and the FCC centered on unexpected $1.99-per-megabyte data charges on the bills of customers who were not on data plans and had not knowingly purchased any data.
The FCC linked the charges to a variety of circumstances.
Some were triggered by games bundled onto Verizon phones that downloaded data without customers' knowledge. Some were related to Web links designated as free of charge - including fees for visiting Verizon Wireless' own Mobile Web home page.
Some of the unwanted downloads were initiated by third-party companies, making them reminiscent of the landline phone-bill problem known as "cramming." The term refers to small, easily overlooked charges for unwanted third-party services that appear on phone bills from carriers such as Verizon Communications, co-owner of Verizon Wireless.
Not all of the charges were completely unintentional. In some cases, the FCC said Verizon Wireless customers were charged for actual but failed attempts to access data.
The FCC refrained from calling the $25 million payment a penalty, and Verizon Wireless said it was "a voluntary payment." But the FCC made its perspective clear.
Chairman Julius Genachowski said in a statement: "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."
The FCC said customers should contact Verizon if they don't get a refund they believe they deserve, and have a right to have appeals resolved within 30 days.
"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," Genachowski said.