Multi-Million Dollar Settlement With Verizon Wireless over ‘Free’ Ringtones

LawFuel.com
~First-of-its-kind advertising model obtained in settlement will provide
consumers protection from fine print~

TALLAHASSEE, FL – Attorney General Bill McCollum today announced his office
has reached an agreement resulting in millions of dollars in refunds to
Florida Verizon Wireless and Alltel consumers for third-party charges on
their cell phone bills. Verizon Wireless, LLC has also agreed to adopt a
series of “best practices” standards which will protect consumers from
third-party charges, including charges for “free” ringtones and other cell
phone content customers either didn’t order or didn’t realize would result
in a monthly charge.

“Consumers deserve to get their money back when a company misrepresents
something as free that isn’t,” said Attorney General McCollum. “I commend
Verizon Wireless for providing full restitution to their Florida customers
and changing the business model to better protect consumers nationwide.”

Cell phone content includes ringtones, music, wallpaper, horoscopes and
other material that is often promoted by online marketers as “free,” but
ultimately ends up costing up to $19.99 a month. The charges appear on a
subscriber’s monthly wireless bill and are usually recurring. The bill
charges often appear under the following indiscernible names: “OpenMarket,”
“M-Qube” and “M-Blox.”

A large number of complaints related to the mobile content industry led to
an investigation which revealed that thousands of Florida consumers had
received these charges on their cell phone bills for mobile content
downloads that they neither knowingly authorized nor desired. Prior to the
investigation, Verizon offered its customers the ability to block
third-party mobile content and to implement parental controls free of
charge. The investigation and subsequent settlement have been negotiated by
the Attorney General’s CyberFraud Section.

Verizon Wireless has agreed to first-of- their-kind standards for
advertising on websites, prohibiting the use of the word “free” without
clear disclosure of the actual price and requiring all content providers
and advertisers to clearly and conspicuously disclose the true cost of cell
phone content. These compliance standards, which include website design
restrictions for online advertisers, will ensure consumers see and
understand the terms and conditions of the purchase. Verizon Wireless will
enforce these new standards through its contracts with all content
providers and advertisers nationwide. Alltel will also be required to
adopt these “best practices” under the company’s acquisition by Verizon
Wireless.

As part of the settlement, the company will pay a total of $1.5 million,
with $1 million for Verizon Wireless and $500,000 for Alltel, to reimburse
the state for the costs of its investigation and to help the Attorney
General’s Office fund the efforts of the task force as it continues to
press for similar reform across the industry. The agreement was negotiated
with full cooperation for Verizon Wireless LLC.

The Attorney General’s Office has already obtained several settlements with
players from each part of the industry, including marketers, billing
aggregators, content providers and wireless service providers. Verizon
Wireless is the second wireless provider to set up these standards and
offer consumer refunds; AT&T Mobility reached an agreement in February
2008.

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