Verizon Signs Anti-Cramming Agreement

Company will enact policies to prevent third-party billing without consumers’ consent

July 10, 2007 -- TALLAHASSEE, FL – Florida Attorney General Bill McCollum today announced a new consumer protection initiative for Florida’s telephone consumers as part of an agreement reached with Verizon. Under the agreement, the company will develop an early warning system designed to identify third-party companies that may attempt to place unauthorized charges on consumers’ phone bills. This illegal practice, known as “cramming,” occurs when the unauthorized charges are added to phone service bills often without the consumer’s knowledge or consent. Verizon has more than 40 million access lines inside the coverage region affected by the agreement.

“Unfortunately, victims of cramming often don’t realize they are being improperly billed until they have been paying the charges for a significant length of time,” said Attorney General McCollum. “Today’s agreement is the third reached with major telephone companies serving our state, offering much needed protection to Florida’s consumers.”

As part of the agreement, Verizon will require merchants and billing and collection clearinghouses to forward all consumer complaints referencing “cramming” to the phone company. If at least 220 complaints within the 28-state Verizon region reference the same company over a month-long period – an average of eight complaints per state – Verizon will take action against the company to protect telephone consumers. These actions may include the requirement that the company accused of cramming send out written notices to all new Florida subscribers notifying them of the following: their service subscription; the date the charges will begin to appear on their Verizon bill; the amount of the charges, and how the consumer may cancel the service subscription. If cramming continues, Verizon may cease doing business with the merchant.

The agreement follows similar settlements with Embarq and AT&T and a nationwide settlement with Email Discount Network (EDN). The company had allegedly failed to clearly disclose that offers for internet savings were not free and that customers who submitted personal information to the company would be charged unless they contacted EDN to cancel the charges. More than 250,000 consumers nationwide were charged a monthly fee for the coupons. EDN agreed to make restitution to every consumer who was adversely affected by the company’s business practices and who submits a claims form, with restitution expected to exceed $1 million.

The case involving Verizon was initiated last September when the Attorney General's Office initially sued EDN for cramming. In conjunction with the lawsuit, the Attorney General’s Office and the Office of Public Counsel filed a joint petition before the Florida Public Service Commission against Verizon, Embarq and BellSouth seeking to protect Florida consumers from the deceptive practices.

Today’s agreement is the final step in resolving the issue of how telephone companies with Florida customers will address cramming and what steps will be taken to proactively protect telephone consumers from the illegal practice, which occurs when unauthorized charges from third parties appear on phone bills.

Source: Florida Attorney General

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