Verizon “Administrative Charge” on “Flat Rate” Plans California Class Action

Cellco Partnership, which does business as Verizon Wireless, and Verizon Communications, Inc. are defendants in this class action about adding charges to its supposedly flat rate monthly plans. The complaint alleges that this is a “bait-and-switch” scheme, where Verizon advertises a fixed monthly rate, and then, “after customers sign up, Verizon actually charges higher monthly rates than advertised and promised by padding the bill with an undisclosed so-called ‘Administrative Charge.’”

The class for this action is all individual consumers in California who currently or formerly subscribed to a post-paid wireless service plan from Verizon and were charged what Verizon labeled an “Administrative Charge” within the applicable statutes of limitations.

The Administrative Charge in question has been added to customer bills since 2005. When it was first instituted, it was only forty cents per phone line. However, it has been raised repeatedly, and at this point, the complaint alleges, it’s now $1.95 per line—nearly five times the original charge.

The complaint alleges, “Verizon has used the Administrative Charge as a revenue lever to covertly jack up its monthly service prices and to squeeze its existing subscribers for more cash whenever Verizon desires.” It claims that Verizon has taken in over a billion dollars in these charges from its California subscribers alone.

Subscribers sign up for a flat-rate plan. The complaint claims, “The first time Verizon customers can possibly learn about the existence of the Administrative Charge, or its amount, is on their monthly billing statements, which they begin receiving only after they sign up for the service and are financially committed to their purchase and cannot cancel without penalty.”

To misrepresent the charge, the complaint says, Verizon doesn’t list it in the monthly charge section of the bill; instead, it puts it in the “Surcharges” section along with government costs. “Even worse,” the complaint alleges, “Verizon explicitly and falsely states on its monthly bills that the Administrative Charge is a surcharge imposed on subscribers to ‘cover the costs that are billed to us by federal, state or local governments.’ Thus, by Verizon’s own design, the monthly billing statements serve to further Verizon’s scheme and keep customers from realizing they are being overcharged.”

However, on its website, the complaint alleges, it gives a different version of the purpose of the Administrative Charge, “claiming it is tied to various of Verizon’s operating costs including the telephone company interconnect charges and network facility and service fees—i.e., the basic costs of providing wireless service, which a reasonable consumer would expect to be included in the advertised price for the wireless service plan.”

The complaint claims that the Administrative Charge is not tied to interconnect charges and network facility fees, because it does not change according to Verizon’s actual costs. Instead, it claims, “Verizon sets and increases the amount of the Administrative Charge based on its internal revenue targets.” It claims that during a period when the Administrative Charge doubled, Verizon’s costs for these things actually went down.

Article Type: Lawsuit
Topic: Consumer

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