Under prodding from New York Attorney General Eliot Spitzer, Verizon has agreed to give greater protections to consumers who have unauthorized third party charges placed on their telephone bills.
The agreement with Verizon Communications Inc. marks the first time a telephone company has been required to take steps to monitor and correct the fraudulent billing practice known as "cramming."
"Verizon has an obligation to protect its subscribers from fraud," Spitzer said. "Under this agreement, the company will take a series of steps to protect individual consumers and small businesses from third parties that place unauthorized charges on phone bills."
The agreement applies only to Verizon's New York customers. To extend similar protections to consumers in other states would require action by federal regulators, state authorities or Verizon.
The Attorney Generals settlement focuses on contracts between Verizon and other companies to provide internet access, web hosting and other services. Through these contracts, Verizon had agreed to add third party service charges to a consumers telephone bill.
Thousands of New Yorkers each year and many more nationwide have complained about unauthorized charges that have been "crammed" onto their phone bills. Many people said Verizon did nothing to assist them when they protested the charges on their bill. Verizon instead insisted that consumers resolve the matter with the third parties themselves.
Many of those targeted by "crammers" are small business owners, whom fraudulent operators often claim authorized the charges.
The Attorney Generals agreement with Verizon requires the following:
• Verizon must directly resolve consumers complaints by removing unauthorized charges and blocking future charges. While Verizon had promised to do this in the past, the investigation uncovered numerous instances when Verizons representatives did not follow this policy, or were not aware of it;
• Verizon must terminate contracts with third parties that have persistent complaint levels. The Attorney Generals investigation found that in some cases, Verizon did not promptly take action against parties with high complaint levels, even after lawsuits and regulatory actions had been commenced;
• Verizon must ensure that each bill containing third party charges includes a toll-free contact number for consumers to call to question the bill. Current FCC regulations require that such information be provided. However, the Attorney General s investigation revealed numerous instances where the number provided on Verizon bills was not correct; and
• Verizon must provide credits for "crammed" third party services to consumers where credits have not already been given.
Verizon has also agreed to pay $75,000 to the state to resolve the Attorney Generals investigation.