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Highlights
- Verizon settled a class-action lawsuit agreeing to a $100 million payout for misleading customers.
- The company generated an estimated $20 billion in revenue from these undisclosed fees.
- The maximum payout per customer is $100, and nearly a year later, payments haven't been distributed.
- Verizon recently increased these fees again while simultaneously announcing record dividends for shareholders.
Verizon's $100 million settlement in a class-action lawsuit over hidden administrative fees initially seemed like a win for consumer advocacy. But, a closer look reveals a stark contrast: the settlement is a mere fraction of the $20 billion the company earned from the fees, and most affected customers will receive no more than $ 100 if they receive anything at all.
To make matters worse, Verizon has already reinstated higher fees while celebrating record dividends for its shareholders.
The $20 billion deception
Between 2016 and 2023, Verizon customers unknowingly paid administrative fees that weren't disclosed upfront. These charges padded Verizon's bottom line to the tune of an estimated $20 billion in extra revenue. The class-action lawsuit accused Verizon of deceptive advertising, claiming these fees misled customers about the actual cost of their plans.
In response, Verizon agreed to a $100 million settlement, an amount that was celebrated at the time but now appears paltry compared to the revenue generated. Eligible customers were promised payouts of up to $100, including a $15 base payment and $1 per month for every month they paid the disputed fees. However, the claim process was cumbersome, and payments have yet to be distributed, leaving many customers frustrated.
Settlement delays and difficulties
The settlement became effective in September 2024, but payments are not expected until January 2025, nearly a year later. Even then, the process to claim compensation was far from straightforward. Customers needed to submit billing statements or receipts proving they had paid the fees, and those who missed the deadline would receive nothing.
For those who filed claims, the payout is capped at $100, a drop in the bucket compared to the years of overcharges many customers endured. The delays and complexities have left customers questioning whether the settlement was ever about restitution or simply a way for Verizon to move on without meaningful consequences.
A bold repeat: fees increase, shareholders win
Adding insult to injury, Verizon increased administrative fees in December across customer bills with little to no notice. This move comes before the settlement payouts have even been issued, suggesting the company is unbothered by the legal and reputational fallout.
The timing couldn't be more telling. Within days of raising fees, Verizon also announced record dividend payouts to shareholders, further illustrating where its priorities lie. Customers are left footing the bill again while shareholders reap the rewards.
My take
This saga exemplifies the frustrating imbalance of power between telecom giants and their customers. Verizon's $100 million settlement was touted as a win for consumers, but the reality is far from it. When a company can generate $20 billion in revenue from undisclosed fees and settle for a mere fraction of that amount, it's hard to see it as anything other than a slap on the wrist.
Even more troubling is Verizon's willingness to hike fees again, knowing the backlash from the previous settlement hasn't even subsided.
We often hear skepticism about low-cost carriers, with customers fearing worse service due to the lack of physical stores. But stories like this make it clear that even the biggest players, with all their resources, fail to put customers first.
Summary
Verizon's $100 million settlement over hidden fees serves as a stark reminder of the telecom industry's shortcomings. Despite a hefty payout, customers remain at a disadvantage, with minimal compensation and fresh fee increases.
If anything, this case highlights why consumers should consider smaller, more transparent providers. Low-cost carriers may not have the brand recognition or sprawling infrastructure of the big three, but they often prioritize straightforward pricing and customer satisfaction. Verizon's actions remind us that bigger doesn't always mean better.
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