[Infowarrior] - Verizon settles deceptive marketing investigation

[Richard Forno]

http://www.oag.state.ny.us/press/2007/oct/oct23a_07.html

October 23, 2007

VERIZON WIRELESS AGREES TO SETTLE DECEPTIVE MARKETING INVESTIGATION

³UNLIMITED² INTERNET PLANS WERE ACTUALLY LIMITED

COMPANY AGREES TO CHANGE PRACTICES AND REIMBURSE CUSTOMERS

New York, NY (Oct 23, 2007) ­ Attorney General Andrew M. Cuomo today
announced that Verizon Wireless has agreed to halt the deceptive marketing
of its internet usage plans and reimburse $1 million to customers for
wrongful account termination nationwide.

The settlement follows a nine-month investigation into the marketing of
NationalAccess and BroadbandAccess plans for wireless access to the internet
for laptop computer users. Attorney General¹s investigation found that
Verizon Wireless prominently marketed these plans as ³¹Unlimited,² without
disclosing that common usages such as downloading movies or playing games
online were prohibited. The company also cut off heavy internet users for
exceeding an undisclosed cap of usage per month. As a result, customers
misled by the company¹s claims, enrolled in its Unlimited plans, only to
have their accounts abruptly terminated for excessive use, leaving them
without internet services and unable to obtain refunds.

³This settlement sends a message to companies large and small answering the
growing consumer demand for wireless services. When consumers are promised
an Œunlimited¹ service, they do not expect the promise to be broken by
hidden limitations,² said Attorney General Andrew Cuomo. ³Consumers must be
treated fairly and honestly. Delivering a product is simply not enough ­ the
promises must be delivered as well.²

The Attorney General¹s investigation uncovered that while Verizon Wireless
prominently placed print, television and online advertisements promising
³UNLIMITED² NationalAccess and BroadbandAccess for $59.99 per month:

    *  ³Unlimited² plans had hidden restrictions. Verizon marketed its
NationalAccess and BroadbandAccess service plans to consumers nationwide as
³Unlimited² despite the plans¹ limitations. In fact, the plans only
permitted limited activities such as web browsing, email and intranet
access. Customers who used their plans for common activities such as
downloading movies and video or even playing video games online, were
unwittingly in violation of the terms and conditions of their service
agreements.

    * ³Excessive use² of Unlimited Plans resulted in abrupt terminations.
Verizon Wireless terminated heavy internet users claiming that the high
levels of usage could only have been attained by activities, such as
³streaming or downloading movies and video² prohibited by the terms and
conditions. These usage restrictions were not clearly and conspicuously
disclosed to consumers and directly contradicted the promise of ³unlimited²
service. Customers found their accounts abruptly terminated for excessive
use, leaving them without internet services and unable to obtain refunds for
their wireless access cards and cell phones.

>From 2004 until April of this year, Verizon Wireless terminated over 13,000
consumers nationwide for ³excessive² use of its ³unlimited² internet access
plans. These customers were subsequently unable to use their Verizon
Wireless cell phones and modems to connect to the internet.

Verizon Wireless has agreed to reimburse all terminated consumers for the
cost of wireless access cards or cell phones purchased by the consumer in
order to utilize Verizon Wireless¹s wireless internet service. Verizon
Wireless estimates the total amount of restitution to be approximately $1
million nationwide. Verizon Wireless has also agreed to pay penalties and
costs of $150,000 to New York State and revise the company¹s marketing of
its wireless internet access plans.

Verizon Wireless fully and voluntarily cooperated with the Office of the
Attorney General throughout this inquiry. Since April of 2007, Verizon
Wireless has voluntarily ceased cutting off customers based on their data
usage and no longer prohibits common internet uses.

The case was handled by Justin Brookman, Chief of the Attorney General¹s
Internet Bureau, with assistance from Investigator Vanessa Ip.