Verizon Wireless Agrees To Settle Deceptive Marketing Investigation
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 General's investigation found that Verizon Wireless prominently marketed these plans as "'Unlimited," 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 company's 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.
"This settlement sends a message to companies large and small answering the growing consumer demand for wireless services. When consumers are promised an 'unlimited' service, they do not expect the promise to be broken by hidden limitations," said Attorney General Andrew Cuomo. "Consumers must be treated fairly and honestly. Delivering a product is simply not enough - the promises must be delivered as well."
The Attorney General's investigation uncovered that while Verizon Wireless prominently placed print, television and online advertisements promising "UNLIMITED" NationalAccess and BroadbandAccess for $59.99 per month:
- "Unlimited" plans had hidden restrictions. Verizon marketed its NationalAccess and BroadbandAccess service plans to consumers nationwide as "Unlimited" despite the plans' 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.
- "Excessive use" 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 "streaming or downloading movies and video" prohibited by the terms and conditions. These usage restrictions were not clearly and conspicuously disclosed to consumers and directly contradicted the promise of "unlimited" 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 "excessive" use of its "unlimited" 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 Wireless's 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 company's 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 General's Internet Bureau, with assistance from Investigator Vanessa Ip.
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