Verizon is now paying out 72.8 million dollars, to the Federal Government and outraged clients, to make amends for overcharge customers on downloads they never approved.

This debacle started with customer complaints their bills were way more costly then they were supposed to be.  One plan on Verizon used a”pay as you go” system; people would only have to pay for the services they used.  Verizon charged $1.99 per megabyte, a fairly reasonable rate.  The issue arose when content was downloaded without the client’s permission, usually from shady internet sites or viruses.  Distressed clients saw that they had been far overcharged for the downloading of material that they had never approved.  They pleaded with Verizon to reduce their fees, but Verizon countered that they were reasonable for their own actions.  Outrage grew.

As this movement gained momentum, the Federal Communications Commission, FCC, got involved.  They are concerned with all private sector communication issues, so this growing problem fell squarely in their territory.  Almost ten months ago, back in early January 2010, they initiated an official probe into Verizon concerning the questioned fees.  They delved quickly into the company, amongst vociferous protests.  Verizon had a time bomb on their hands, the more people that knew about the probe the more people that would question Verizon’s trustworthiness.  This would lead directly to losing customers and stock value, both things that always should be avoided.  Shortly after the probe was initiated Verizon began negotiating with the FCC to remove the probe.  It is only now, ten months later in late October 2010, that the Federal probe has been retracted, at a heavy cost to Verizon.

Verizon is now in the process of spending 72.8 million dollars to clean up the mess of created by these “mystery fees.”  25 million is being paid to the US Treasury, to cover all costs concerning the probe.  The remaining 52.8 million is being paid to customers who the FCC deemed were over charged.  In addition, Verizon is now setting up a specialized “Data Charged Task Force” to deal with potential mystery charges in the future.  Apologies and reimbursements are being sent out to the offended customers in their bills, hopefully ending this problem.

The ramifications of this blunder are extreme.  Verizon will not be able to laugh off this mistake, 72.8 million dollars were given away to deal with a penchant problem that never should have gotten out of control.  Stocks value has fallen dramatically since the problems began and are now only tentatively returning to normal.  Many customers have switched to other services, simply because they are horrified with how poorly Verizon handled this matter.

The worst realization is that they did not solve the problem of the mystery fees.  Verizon failed to figure out a method to eliminate unwanted downloads.  They have taken precautions against it, but there are still major loopholes from which expensive content can be downloaded without knowledge of the client.  The customer service branch will be helpful in solving disputes, to an extent.  In the end it will be the word of the client against the actions of the machine, leading to endless problems in the future for this department.  No problems have been solved, only money and time has been lost.

Sources:

http://money.cnn.com/2010/10/28/technology/verizon_fine/index.htm

http://www.pcmag.com/article2/0,2817,2371656,00.asp

http://www.foxbusiness.com/markets/2010/10/28/fcc-hits-verizon-record-fine/

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