By Maisie Ramsay
Verizon Wireless has agreed to pay the state of Florida $1.5 million settlement after an investigation revealed that consumers had been duped into paying for mobile content falsely advertised as free.
The investigation by Florida Attorney General’s CyberFraud Section found that thousands of Verizon customers had received recurring charges for mobile content like ringtones which were often promoted by online marketers as free. The content cost customers up to $19.99 a month, with charges appearing on bills under indiscernible company names like “OpenMarket”, “M-Qube” and “M-Blox”.
As part of the settlement, Verizon Wireless will pay $1 million and its subsidiary, Alltel, will pay $500,000. Both Verizon and Alltel have adopted advertising standards that prohibit the use of the word “free” without clearly disclosing the true cost of cell phone content. The standards also apply to Verizon’s contracts with content providers and advertisers.
Verizon will also refund customers for the charges through a bill insert. It is not yet clear how many subscribers will submit a claim for a refund.
“The [Assurance of Voluntary Compliance] covers changes we made in our business over the past several years - it's actually "old news”,” said Verizon spokesman Jeffery Nelson in a statement. “Verizon Wireless has been the industry leader in protecting wireless consumers from fraud, spammers, telemarketers and unwanted intrusion into their mobile experiences. The [agreement] is just another step in that process.”
The Attorney General’s investigation already lead to settlements from each part of the industry involved in the scheme, including marketers, billing aggregators, content providers and carriers.
Last February, AT&T agreed to pay a $3 million settlement for the same issue and also adopted advertising and marketing standards for its mobile content. The carrier also gave customers refunds for the charges covered in the settlement.