Verizon spends $1.5M in ringtone settlement
TALLAHASSEE, FL – Attorney General Bill McCollum announced his office has reached an agreement which resulted to a million dollar refund in the Florida area. Verizon and Alltel consumers will be given the settlement account of $1.5 million dollars to refund third-party charges on their phone bills. The Telco has also agreed to assume a series of “best practices” standards to help protect the consumers from third-party charges, including hidden charges for “free” ringtones. What happens is that cellular phone customers either didn’t order these ringtones or didn’t realize that there would be a monthly charge after the free trail period of the ringtones.
“Consumers deserve to get their money back when a company misrepresents something as free that isn’t,” Attorney General McCollum said in an interview. He further said he commends Verizon Wireless for providing a full compensation to Florida customers and improving the business model to better protect consumers nationwide.
The content of the mobile phone includes not just ringtones but music, horoscopes, wallpaper and other free materials that are promoted by the Cell phone companies including ringtones, music, horoscopes, wallpapers and other materials which is often promoted by marketers and upsellers online as a part of their marketing strategy to be free of charge. Marketers would say it is free but ultimately it ends up that you have to pay $19.99 a month after the free trial month. The charges appear on a subscriber’s bill and are usually recurring every month.
There have been a large number of complaints regarding this so called free ringtones in the Florida area. The investigation which revealed that thousands and thousands of Florida consumers received these charges on their mobile phone bills for content downloads that they not knowingly authorized. Prior to the investigation, Verizon also offered its clients the ability to implement parental controls and to block third-party mobile content free of charge. There has been an investigation negotiated by the Attorney General’s CyberFraud Section and subsequent settlement.
“Free” has been used and abused in the advertising industry and Verizon Wireless has agreed to standardized advertising on websites, eliminating the use of the word “free” if there are no clear disclosure of what the actual price. They are requiring all advertisers and content providers to clearly disclose the true cost of the mobile phone content. These standards will ensure consumers know and understand the terms and conditions of their purchase. Verizon will enforce these new standards through its contracts. Alltel is also required to adopt these practices under the company’s acquisition by Verizon Wireless.
The settlement of the company will have to pay both Verizon Wireless and Alltel customers. $1 million will be allotted for Verizon and $500,000 for Alltel. There are also reimbursement costs for the investigation to help the Attorney General’s Office continue its press for reform across the wireless industry. This agreement was negotiated with full cooperation for the Telephone Company Verizon Wireless LLC. The Office of the Attorney General has obtained several settlements with players from each part of the industry. Verizon Wireless is the second wireless to offer refunds and set up these compliance standards.
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When companies advertise products as free, they should live up to it. The problem with ads nowadays is that we have to read the fine print which says that it is only free the first month and the succeeding months you will have to pay for the ringtones that you have.