Reuters: Regulatory News: US consumer agency opposes 'cramming' phone fees settlement

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US consumer agency opposes 'cramming' phone fees settlement Aug 20th 2012, 22:00 Mon Aug 20, 2012 6:00pm EDT * Landline customers face unauthorized phone bill fees * Practice costs consumers $2 billion a year * FTC calls proposed settlement "inadequate" * Settlement would end 2009 lawsuit brought in California By Joseph Ax Aug 20 (Reuters) - The U.S. consumer protection agency opposes a tentative settlement that would refund Verizon Communications Inc phone customers for unauthorized fees, calling it inadequate and claiming it could undermine government efforts to crack down on the practice. The fees, known in the phone industry as "cramming," cost consumers $2 billion a year, according to a Senate inquiry completed last year. Phone companies add charges from third-party companies and marketers on monthly bills mailed to landline customers, who typically have no idea they are being charged or believe incorrectly that the charges are legitimate, consumer advocates say. Lawyers for the class-action plaintiffs said they were disappointed with the Federal Trade Commission's opposition to the deal reached in February, saying it was the best settlement that could be achieved. The settlement has yet to be approved by the presiding judge in U.S. District Court in California. The FTC, which protects consumer interests, along with various states and the Federal Communications Commission, targeted cramming in recent years as an abusive practice. The charges list services such as music downloads, voicemail, ringtones and online news and can add anywhere from $1.99 to $19.99 a month to a phone bill. The proposed settlement reached in February between a class of consumers and Verizon, would end a 2009 lawsuit brought in California. A hearing is scheduled before a federal judge next month to consider final approval. The proposed settlement does not have a total dollar amount because it would depend on how many customers choose to participate. In a brief dated Friday, the FTC argued that most customers would ignore settlement notices because they do not realize they have paid the charges, while those who file claims would be forced to go through an arduous paperwork process. "Everyone involved in this case except consumers who were fraudulently billed benefits from this settlement," the FTC wrote. "Verizon obtains a beneficial release regardless of whether it pays a penny in claims, those who fraudulently billed consumers walk away with their ill-gotten gains and at least partial immunity from making their victims whole, and the plaintiffs' attorneys receive millions of dollars." Customers who are unaware of the settlement may relinquish their ability to pursue claims in the future, potentially limiting the FTC's ability to take further action against the practice, according to the brief. John Jacobs, one of the lead plaintiffs' attorneys, called the brief "really disappointing." Jacobs said the settlement installed new protections for consumers and Verizon put an end to cramming within 45 days of settling the lawsuit. He said if customers chose to participate in the settlement, "people are going to get 100 cents on the dollar. I've never seen a settlement like that, period." Verizon spokesman William Kula said the company agrees with retired judge Daniel Weinstein, the mediator on the case, who previously called it an "excellent settlement that provides substantial monetary benefits to the class." The case is Moore et al. v. Verizon Communications Inc. et al., U.S. District Court of the Northern District of California, No. 09-1823. Link this Share this Digg this Email Reprints

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