Verizon Tries to Stuff $90M Worth of Worms Back Into the Can

For years, Verizon Wireless has fielded complaints from customersabout mistaken data charges.

This Sunday, the carrier announced it was providing a rebate totalingUS$90 million to be distributed to the estimated 15 million customers hit by thesecharges. Most of the customers reportedly were clipped for $2 to$6, which will be credited to their bills in the coming months. Formercustomers impacted by the erroneous charges will receive a check.

After two years of escalating consumer complaints, not to mention severalmedia stories, why is Verizon acting now? One obvious answer isthat Verizon has begun to feel the heat from a Federal CommunicationsCommission investigation of these so-called mystery fees, which the agencylaunched in January.

In fact, the FCC appears to be undeterred byVerizon’s rebate. Questions remain as to why it took the company two years to reimburse its customers, and why greater disclosure and othercorrective actions did not come much, much sooner, according toMichele Ellison, FCC enforcement bureau chief.

The enforcement bureauplans to continue to explore these issues, and Verizon is facing thepossibility of additional penalties, she said.

The FCC and Verizon did not immediately respond to CRM Buyer’s calls seeking comment.

Customer Reactions

The battle between the FCC and Verizon over this issue is bound to beone that will take months, if not years, to fully play out.

In the immediate term, Verizon has a bigger — and potentially moredevastating — problem on its hands: a possible backlash from consumers.How the situation will play out depends on a number of factors,including the FCC’s investigation and how the rebate is portrayed inthe media.

It is easy to make the case that the company has engaged in somestrategic nickel-and-diming of its customer base — which only ceasedafter the government stepped in.

“Whether or not that was the case, this is going to wind up deliveringa real blow to Verizon’s reputation as a good customer serviceprovider,” said Michael W. Robinson, senior vice president of Levick Strategic Communications.

“Telecom is one of the most hyper-competitive sectors there is, andthe money the providers spend to woo customers is extraordinary,” Robinson told CRM Buyer.

Given that, it is amazing that Verizon would put itsreputation at risk for an amount that is merely a rounding number forthe carrier, he said. “Especially now, consumers are just sick of getting dinged with fees.”

Consumers are also not in a forgiving mood right now, continued Robinson,especially for companies that are misleading or inaccurate aboutbilling. “You get a bill, you have to trust it is accurate. A companythat is off by even a few dollars is going to lose the trust of itscustomer base.”

Dodging a Bullet

On the other hand, Verizon has a good chance of appeasing customersand walking away from this episode unscathed — if it manages to makeits own interpretation of what happened the dominant narrative.Individuals were only overcharged by a few dollars, it appears, an amount that may be easy to shrug off.

The situation got out of control, but it was not likely because of adeliberate intent on Verizon’s part to prey on its customers, Andy Abramson,CEO of Comunicano, told CRM Buyer.”Customer service issues like this all too often get stuck at thefront line or middle management level, where the focus is on procedureor policy. It is too hard for the company to see the big picture untilit has gotten out of control.”

What happened with these fees, Abramson said, started out as a tech issuethat turned into a customer service issue that did not reach the upperlevel of management until it was too late.

Verizon has built up a lot of customer service good will, he maintained,especially when it is stacked up against telecom providers that areperceived as offering poor service — such as AT&T Wireless.

“I thinkit is going to weather all this just fine,” predicted Abramson.

More Oversight Needed

About the only certainty in this story is the need for ongoingvigilance by regulatory authorities and consumer watchdogs, saidJonathan Askin, assistant professor of clinical law at Brooklyn LawSchool.

This episode “demonstrates that, contrary to political and popularsentiment, the wireless industry is not quite as competitive andfrictionless as the wireless carriers would like us to believe,” hetold CRM Buyer.

Changes to current laws — as well as penalties — would also bewelcome, he said.

“If carriers are only compelled to pay the costs of over-billing whencaught and without additional penalty, then carriers have no incentiveto behave as honest service providers,” reasoned Askin. ” The consequences ofover-billing must be more than a mere ‘cost of business.'”

Also, telecom firms would be forced to treat customers better, he suggested, if itwere easer to get out of contracts or transfer them to anothercarrier.

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