Phone Cramming Leads to Verizon Settlement

March 5, 2012 — -- Telephone giant Verizon has agreed to settle a class-action lawsuit over "cramming," in which outside companies place charges on consumers' phone bills without their permission. The remarkable thing is that customers will be eligible for 100 percent refunds of the crammed charges. Most class actions only achieve restitution for victims at a fraction of the true harm. Verizon has not admitted fault in the matter, but has done the right thing.

Even better, in the future, Verizon will only put outside charges on new customers' bills if they opt in --meaning they have given permission for this to happen. And who would opt in? Just be on the look out, consumers, because often choices like this are buried in fine print or stated in baffling legalese. And it's unclear whether existing customers will be given a choice, so I suggest calling Verizon or going online to inquire. (Isn't it ironic that it's often easier to reach the phone company by NOT calling?)

To back up, here's more detail on what "Cramming" is. Cramming charges are usually small billings of less than a dollar made on landline phone bills by outside companies that provide --or pretend to provide-- services such as horoscopes, weather reports or auxiliary voicemail boxes. The key to this deception is that the charges are so small and phone bills are so complex, that many consumers never notice and the crammers make millions a few cents at a time.

For years, the big landline phone companies have claimed they had no choice but to include the charges if outside companies asked them to. That argument is a relic of when customers would have their local phone service with one company and their long distance with another and the local phone company was obligated to list the long distance company's charges on its bills.

Cramming has been around for a long time. I even wrote about it in my 2004 book, The Savvy Consumer. But oddly enough, even though so many Americans have dropped their landlines altogether, it became a hot topic in the past couple of years. Last summer, the Senate Commerce Committee wrapped up a months-long investigation of cramming. And the Federal Communications Commission has held multiple hearings on the subject, finally concluding that 95 percent of victims don't even know they have been crammed --which is why it works so well for the bad guys. In fact, the Feds believe Americans have lost $10 billion to these third party charges over just the last five years.

So, back to why this settlement is such good news. With the opt-in feature, it sets a precedent that could kill off cramming all together. Plus, both current and former customers will be able to get full refunds of the unauthorized third party charges. If you were crammed for years on end without noticing, the pennies will add up for you just as they have for the crammers. Hopefully you'll at least get a pair of shoes, a dinner out --or a phone bill payment-- out of it. The attorneys for the class say some consumers may have claims for hundreds or even thousands of dollars.

So here's how you get your money. The settlement covers phone accounts belonging to individuals, small businesses and local governments. The time period is for billings mad between April 27, 2005 through February 28, 2012. You will either be able to make a "full payment claim" --presumably by providing detailed proof-- or a "flat payment claim" for $40 with fewer hoops to jump through. Once the settlement receives final approval from the judge, the forms will be available here. The deadline is November 15 of this year. If you'd like more information, you can contact the settlement administrator at www.verizonthirdpartybillingsettlement.com or call 1-877-772-6219.

The website and toll free number weren't working as I wrote this, but are supposed to be working by March 9, 2012. And how about that? A class action settlement with a PHONE NUMBER you can call for information. It's only fitting!