Posted in The Regulatory Mix dated 9/11/13, we reported that a U.S. District Court in California has approved a Settlement in a class action suit brought against Verizon Communications, Inc. for cramming. Filed in 2009, the lawsuit was brought on behalf of a nationwide class of current and former Verizon landline customers who were billed for allegedly unauthorized third-party charges submitted to Verizon by billing aggregators on behalf of third-party providers. We thought you would like some additional information so more details are outlined below.
Among other things, the Settlement calls for complete refunds of all unauthorized charges for class members filing full payment claims or flat payments of $40 for class members who do not want to file a full payment claim. Verizon also agreed to provide class members with the right to obtain, for free, a billing summary identifying all third-party charges they were billed for during the class period and the ability to use that billing summary to submit a full payment claim to recover 100% of all unauthorized third-party charges.
The Settlement also includes injunctive relief that requires Verizon to make several changes in the way it conducts its third-party billing business.
Changes affecting aggregators and third-party service providers are as follows:
- reduced cramming complaint thresholds for third-party charges at which Verizon has the right to terminate billing by aggregators and third-party service providers;
- increased penalties for cramming complaints;
- a requirement that obligates Verizon to cause aggregators to notify other landline carriers (AT&T and Qwest) and governmental entities of its rejection of a third-party service provider’s application for billing services related to third-party charges or the termination of billing services related to third-party charges;
- a requirement that third-party service providers must have an order confirmation process for third-party charges which verifies any individual order placed for such charges via (a) personal information obtained from a customer that must be verified by an aggregator, and (b) an opt-in communication with customers confirming that they understand they have just placed an order with the third-party service provider;
- notice to customers billed by third-party service providers terminated for cramming; and
- regular independent audits of aggregators and third-party service providers to ensure compliance with Verizon and aggregator anti-cramming policies and procedures relating to third-party charges.
Changes affecting end user customers are as follows:
- an opt-in requirement before new customers can be billed for third-party charges;
- a notice program that explains to existing customers that third-party charges may appear on their bills and that they have the option to block such charges for free;
- a prominent notice to customers any time a new third-party charge is proposed to be added to the customer’s bill;
- enhanced training of Verizon customer service representatives to improve adherence to Verizon’s First Call Resolution Policy, which allows customers who have been billed for third-party charges to obtain a full refund of unauthorized charges without engaging in the settlement procedures outlined in the Settlement; and
- notice to customers billed by third-party service providers terminated for cramming.
Consumer related issues, such as cramming, will continue to be in the spotlight as the challenges of handling complaints, potential fines, and determining an appropriate business strategy on important compliance issues remains a service provider’s responsibility. Cases can take years to settle. Maybe this is an opportunity for telecom companies to review and revise any possible consumer compliance uncertainties?
