WASHINGTON — Verizon Wireless, the nation’s largest mobile phone carrier, will pay $25 million to end an investigation into complaints that it had charged 15 million cellphone customers unauthorized data fees over the last three years, the Federal Communications Commission announced Thursday.
Verizon announced this month that it intended to refund money to its customers for the unauthorized charges. Under a consent decree with the F.C.C. announced Thursday, the company also will pay a minimum of $52.8 million in refunds.
The $25 million settlement is the largest payment under a consent decree in the F.C.C’s history, said Michele Ellison, chief of the agency’s enforcement bureau.
“Today’s settlement requires Verizon Wireless to make meaningful business reforms, prevent future overcharges and provide consumers clear, easy-to-understand information about their choices,” Ms. Ellison said. “I am gratified by the cooperation of the Verizon Wireless team in the face of these issues and pleased they are taking the high road.”
In a statement, Verizon said: “We are a company that listens to its customers and in this case we got to the bottom of a problem and resolved the errors. We have taken this action because it is the right thing to do.”
The long road to the settlement began in November 2007, when customers first started experiencing and then complaining about mysterious $1.99 charges on their monthly phone bills for data sessions that they had not initiated.
The F.C.C. said it started investigating last January after a large number of customer complaints about the charges and after reports in 2009 in The Plain Dealer of Cleveland and The New York Times.
The charges affected customers with a “pay as you go” plan for data or Internet access. Verizon said the “vast majority” of the erroneous charges were incurred when software that was preloaded on some phones automatically contacted Verizon’s data service in what the company called an “acknowledgment” session.
Verizon said that in September 2009 it put in place a feature to limit those inadvertent charges. In addition, the company said it had sometimes accidentally charged customers for access to Web sites through links that were not supposed to lead to data charges. Many customers complained that if they had accidentally hit a wrong button on their flip phones, they would be connected to the Internet and charged a $1.99 fee.
The F.C.C. required and Verizon agreed to take steps to prevent such charges in the future. The company said those steps included software changes to remove automatic acknowledgments between Verizon data centers and phones, and new internal controls that would prevent charges when customers accessed free Web site links. In addition, the company will put in place a data charge task force to monitor and resolve complaints. The task force must report regularly to the F.C.C.
The F.C.C. and Verizon also agreed that the company would initiate customer service improvements, including clearer explanations of its pay-as-you-go data charges and ways for customers to avoid extra charges; an online video tutorial to help consumers understand their bills; and additional training for Verizon customer representatives on pay-as-you-go plans.
Verizon has begun notifying customers eligible for refunds, and it will apply credits or, in the case of former customers, mail checks for the refund amounts in October and November. Most of the credits range from $2 to $6, Verizon said. About 77 million of its customers, or roughly five out of six, are unaffected, the company said.
Customers who do not receive a refund but believe they had unauthorized data charges can appeal and receive a resolution within 30 days, the F.C.C. said.
Julius Genachowski, the F.C.C. chairman, said the settlement “will serve as a significant deterrent to others in the future.”
Mr. Genachowski added: “Today’s consent decree sends a clear message to American consumers — the F.C.C. has got your back. People shouldn’t find mystery fees when they open their phone bills, and they certainly shouldn’t have to pay for services they didn’t want and didn’t use. In these rough economic times, every $1.99 counts.”
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