Verizon Wireless and Alltel customers in Florida will get millions of dollars in refunds of third-party charges that ended up on their telephone bills. Florida Attorney General Bill McCollum struck a deal that holds the telecoms liable for "cramming" by third party billers.
As part of the deal Verizon Wireless, LLC has agreed to adopt a series of "best practices" standards which will protect consumers from third-party charges, including charges for "free" ringtones and other cell phone content customers either didnt order or didnt realize would result in a monthly charge.
"Consumers deserve to get their money back when a company misrepresents something as free that isn't," said Attorney General McCollum. "I commend Verizon Wireless for providing full restitution to their Florida customers and changing the business model to better protect consumers nationwide."
Cell phone content includes ringtones, music, wallpaper, horoscopes and other material that is often promoted by online marketers as "free," but ultimately ends up costing up to $19.99 a month. The charges appear on a subscriber's monthly wireless bill and are usually recurring. The bill charges often appear under the following indiscernible names: "OpenMarket," "M-Qube" and "M-Blox."
A large number of complaints related to the mobile content industry led to an investigation which revealed that thousands of Florida consumers had received these charges on their cell phone bills for mobile content downloads that they neither knowingly authorized nor desired. Prior to the investigation, Verizon offered its customers the ability to block third-party mobile content and to implement parental controls free of charge. The investigation and subsequent settlement have been negotiated by the Attorney Generals CyberFraud Section.
McCollum says Verizon Wireless has agreed to first-of-their-kind standards for advertising on websites, prohibiting the use of the word "free" without clear disclosure of the actual price and requiring all content providers and advertisers to clearly and conspicuously disclose the true cost of cell phone content.
These compliance standards, which include website design restrictions for online advertisers, will ensure consumers see and understand the terms and conditions of the purchase. Verizon Wireless will enforce these new standards through its contracts with all content providers and advertisers nationwide. Alltel will also be required to adopt these "best practices" under the company's acquisition by Verizon Wireless.
As part of the settlement, the company will pay a total of $1.5 million, with $1 million for Verizon Wireless and $500,000 for Alltel, to reimburse the state for the costs of its investigation and to help the Attorney General's Office fund the efforts of the task force as it continues to press for similar reform across the industry. The agreement was negotiated with full cooperation for Verizon Wireless LLC.
The Attorney General's Office has already obtained several settlements with players from each part of the industry, including marketers, billing aggregators, content providers and wireless service providers. Verizon Wireless is the second wireless provider to set up these standards and offer consumer refunds; AT&T Mobility reached an agreement in February 2008.