Verizon Wireless said Sunday that it plans to refund consumers it wrongly charged for data usage, but the company still faces scrutiny from the Federal Communications Commission, which has been investigating Verizon's practices.
On Sunday Verizon released a statement admitting that it had been charging 15 million of its wireless subscribers for data services they didn't intend to use. Verizon has estimated that the total charges, which took place over the past two years, amount to $50 million.
The FCC has been investigating Verizon's mystery data fees for the past 10 months, the agency said in a statement. The agency said its investigation was prompted by consumer complaints. While the FCC said it's happy to see Verizon making amends with customers and fixing the problem, the agency said it will continue investigating Verizon. It is also considering penalties.
"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," Michele Ellison, FCC enforcement bureau chief, said in a statement. "The enforcement bureau will continue to explore these issues, including the possibility of additional penalties, to ensure that all companies prioritize the interests of consumers when billing problems occur."
Verizon said it would start alerting customers in their October and November bills about the refunds and would then start sending checks. Most customers will receive a refund between $2 and $6, but some may receive bigger refunds, the company said.
Verizon said it discovered the error after examining its billing practices. The company said it had inadvertently overcharged some of its customers, who didn't have data plans, for data sessions they didn't intend to initiate. Verizon said the normal billing rate for those data sessions was $1.99 per megabyte.
The charges stem from unintended access to the Internet. For example, people were being charged for accidentally accessing their Web browser, even when customers were not signed up for data services. Some customers were also charged when certain applications were launched that automatically connected their phones to the Internet.
Exactly where the current FCC investigation will lead is still unknown. Consumers have been complaining for years on blogs and customer forums about these "mystery charges" on their cell phone bills. The FCC has singled out Verizon for these charges, but other wireless operators have also been accused of similar practices.
The FCC has not said whether its investigation includes other major carriers, including AT&T, Sprint Nextel, and T-Mobile USA.
While some consumer groups are unhappy with the current FCC for dragging its feet on certain issues, such as Net neutrality, the agency under the leadership of Chairman Julius Genachowski has taken a closer look at several consumer issues.
Earlier this year, the agency invited comments on the billing practices of wireless companies. Specifically, the FCC wants wireless operators to better inform their customers of charges to avoid "bill shock," or unexpected fees. The FCC is expected to present formal rules at its October 14 meeting on bill shock.
The FCC has also been looking into the wireless industry's practice of charging early termination fees. Last year, it sent letters to the major wireless operators and Google asking them to explain how they inform customers of their early termination fee policies. The FCC also questioned Verizon's justification for raising its early termination fees on "advanced devices" or smartphones.
So far, pressure from the FCC has resulted in some changes. For example, after the agency questioned Verizon's $350 early termination fee on "advanced devices," the mobile operator reduced the number of devices that qualify for the fee.