Verizon To Refund Customers, Make Billing Changes Under Cramming Class-Action Suit

Verizon has agreed to make specific changes to its billing practices as part of a proposed settlement of a class-action lawsuit that alleges the telecommunications titan billed its landline phone customers for third-party charges that subscribers didn’t authorize.

A federal judge in California has preliminarily approved a settlement that will make it possible for Verizon customers across the U.S. to receive a full refund for unauthorized third-party charges, lawyers representing the class announced Wednesday.

“Some settlement class members may have a claim for hundreds or thousands of dollars in refunds under the settlement,” class counsel Bryan Kolton said.

The proposed settlement would cover Verizon customers  including individuals, businesses and local government entities  who were billed for third-party charges from April 27, 2005 through Feb. 28, 2012.

Such an unauthorized practice is known as “cramming,” and last year the Federal Communications Commission proposed rules that would require landline phone companies like Verizon to notify customers clearly and conspicuously about the option to block third-party charges from their phone bills if the carrier offers such an option. That proceeding is still pending.

Under the settlement, Verizon has agreed to make various specific changes to billing practices in order to prevent future unauthorized third-party charges.

“It is difficult to overstate the credit that is due Verizon for its commitment to fixing the third-party billing system as it relates to Verizon customers,” said John Jacobs, one of the lead attorneys for the class. “By this settlement, Verizon has committed to extensive and unprecedented changes that we believe will go a long way toward eliminating cramming and will change the industry.”

Case in point: “[F]or all new landline customers,” Jacobs said, “most third-party charges can be included in the customer’s phone bill only if the customer first explicitly agrees to permit third-party charges on their bills.”

Customers will be able to recover the full amount of the unauthorized charges or obtain a $40 refund by submitting claims on forms that will be available at The lawyers said the website and a toll-free number (1-877-772-6219) will be working by March 9, 2012.

There is no dollar cap on the recovery under the settlement, but class members must submit their claims by Nov. 15, 2012.

“Verizon does not tolerate cramming,” Verizon spokesman Bob Elek said when asked for a comment on the settlement. “This settlement recognizes that some of our wireline customers were subject to cramming by third party services providers, and provides another way to make customers  whole for those unwarranted charges, in addition to the process we offer any customer today who tells us they have been crammed.”

The law firms that announced the settlement include Jacobs Kolton, Chtd., David Schachman & Associates, P.C., Keller Grover LLP and Lieff Cabraser Heimann & Bernstein, LLP.

The suit alleges that Verizon billed its customers for third-party charges that weren’t authorized in violation of state and federal law.

Judge Saundra Brown Armstrong, of the U.S. District Court in Oakland, Calif., has preliminarily approved the settlement.

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