Verizon Wireless Investigated by the FCC for `Mystery' Data Charges

Verizon Wireless, the largest U.S. wireless company, is under investigation by the Federal Communications Commission for charging 15 million customers “mystery” fees for data use on their mobile phones.

The FCC began its investigation 10 months ago after customers complained about the fees, the FCC said in an e-mail statement yesterday. Verizon Wireless has reportedly put the amount of the overcharges at more than $50 million in the past two years, the commission said.

Verizon will give refunds to 15 million customers in the next two months as compensation for incorrect data billing, the company said in a separate statement yesterday. Most of the refunds will be $2 to $6. Current customers will get a credit to their account, while former subscribers will be sent checks, the company said.

Verizon Wireless issues credits to customers from time to time based on regular review and monitoring,” Mary Coyne, deputy general counsel at Verizon Wireless said in the statement. “When we identify errors, we remedy them as quickly as possible.”

The billing mistakes happened when customers without data plans were charged for sessions they didn’t initiate, Basking Ridge, New Jersey-based Verizon said. Most of the errors resulted from software in customers’ phones that sent or received data, Verizon said. Other customers were charged by mistake for accessing the Web.

FCC Investigation Continues

The FCC said it will continue to explore Verizon’s practices and may penalize the company.

“We’re gratified to see Verizon agree to finally repay its customers,” said Michele Ellison, Enforcement Bureau Chief at the commission. “But questions remain as to why it took Verizon two years to reimburse its customers and why greater disclosure and other corrective actions did not come much, much sooner.”

The investigation comes amid heightened FCC scrutiny of carriers’ billing practices, Rebecca Arbogast, an analyst at Stifel Nicolaus & Co., said in a note to investors today. The FCC has also reviewed termination fees carriers charge customers who end their two-year contracts early, and the agency plans to consider proposals that would force phone companies to alert customers who pass certain usage measurements, preventing unexpectedly high bills, Arbogast said.

Verizon Communications Inc., which owns the wireless company with Vodafone Group Plc., gained 14 cents to $33.03 in New York Stock Exchange composite trading at 4 p.m. The shares have risen 6.7 percent this year.

To contact the reporter on this story: Amy Thomson in New York at athomson6@bloomberg.net

To contact the editor responsible for this story: Peter Elstrom at pelstrom@bloomberg.net

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