Some Verizon Wireless customers are reporting data usage numbers spiked on their bills to unprecedented levels this summer, giving the cellular company’s bean counters a heaping helping of overlimit fees, charged when customers exceed their data allowance.

The phantom usage problem has become noticeable enough to win attention from the consumer reporter at Cleveland’s The Plain Dealer, who found her own family of four suddenly blowing past their shared 15GB a month, resulting in a $30 overlimit fee.

“My family’s data usage has mysteriously increased significantly every month since February, except for one month,” wrote Teresa Dixon Murray. “My family of four pays for 15GB a month. We’re grandfathered in the old More Everything family share plan. We typically were using no more than 10GB a month. But for the last six months, that has increased steadily — and inexplicably. 8.2. Then 9.7. Then 10.6. Then 12.7. Two months ago, we got alerts that we were nearing our allotment and managed to take care to avoid going over. Last month, despite our efforts, we went over by 1.057GB, and were charged an extra $30.”

Murray questioned why her family’s phones were burning through their data allowance in the middle of the night, while connected to the family’s home Wi-Fi.

A Verizon representative explained phones may be connecting to Verizon’s network because of a new feature installed on some phones, including the Apple iPhone, called “Wi-Fi Assist.” This feature, which could also be called “Verizon Profit Assist” automatically ignores the fact you are connected to Wi-Fi and switches back to the Verizon Wireless network if the phone determines your Wi-Fi connection is “poor.”

“So what’s the definition of poor? I guess Verizon and our iPhones decide that,” Murray questioned.

This feature can be switched off from your phone settings.

They are coming.

But that hasn’t always stopped the overlimit fees. Some customers report they still incur overlimit fees even after switching cellular data off when they reach a warning from Verizon they are about to exhaust their allowance. Verizon charges $10 in overlimit fees, even in instances where the offending extra usage amounts to .0001GB.

Verizon claims its usage meter only provides an estimate of usage, and there are instances where the warning comes too late for a customer to stop using data before they’ve already exceeded their plan allowance. Verizon’s solution is to sell a $5/month “family coverage” add-on that allows parents to monitor data usage before it gets out of hand. But Verizon doesn’t guarantee it will stop overlimit fees based on the measurements of usage it provides.

That add-on plan may or may not have helped Valarie Gerbus, who is now facing a $9,100 Verizon cell phone bill she is adamantly refusing to pay.

The suburban Tampa customer regularly paid $118/month for her cell phone plan, which included 4GB of data usage — an amount she never exceeded, at least until July. Gerbus was shocked to open her bill and discover her normal monthly bill now also included $8,535 in overlimit fees for using 569GB of data in a single month:

(Image: The Plain Dealer)

On July 21, Verizon sent her a text, notifying her that she had used nearly all of her 4 gigabytes of data. The text said she could get 4 more gigabytes for $20. Realizing that she had two weeks before the end of the month, Gerbus bought the additional data.

Within an hour of the purchase, she received another text that told her she only had 10 percent left on the data that she had just purchased. The next text message she received said she could change her plan to 8 gigabytes for an additional $20 a month. She said she bought that upgrade to ensure she didn’t have any data overages.

In a span of several hours, she estimates that she received 40 to 50 texts saying that she needed to purchase more data. She turned the notification off, believing that there had been a glitch in Verizon’s system.

Gerbus said she realizes now that she should have contacted the company at that point, but she didn’t, as she feared being placed on hold by a customer service representative.

She later went to work and planned on paying the bill online. When she found her online statement, it said she owed $6,480 for using 490 gigabytes of data. She was shocked.

“I told them that I won’t pay the bill,” Gerbus told the newspaper. “I can either wait until they take it to a collection agency or when they take it to court. Either way, my credit history will be ruined. I can go bankrupt here.”

Verizon said they are not aware of any widespread problem, but is looking into phantom phone usage at night and some of the more extreme examples of bill shock, where bills extend into the thousands of dollars.

Affected customers report the high bills are, in some cases, tearing families apart.

“It got to the point that we were battling in our family,” reported Lockport, N.Y. resident Tom Walker, who told the newspaper their data usage soared for no apparent reason. “We were really asking each other, ‘Have you been on Facebook too much? What have you been doing?’ We were trying to figure out who was using all this data.”

Gerbus is almost thankful to pay Verizon Wireless a nearly $600 fee to exit her contract early as she switches to T-Mobile. Verizon’s engineers have no explanation for Gerbus’ bill, other than noting her phone contacted Amazon.com at least 400 times over a few days.

Providers with usage caps and usage-based pricing often consider their usage meters more reliable than their own customers, and when customers complain, many representatives trust the meter and insist on payment. When a customer like Gerbus complains about usage that is considerably above average usage, customer service representative are not always receptive.

“I told them that there was no way that I could have gone from 490 to 560 in a day,” Gerbus said. “The [Verizon] person said, ‘Yes there is.'”

Smartphone manufacturers are dealing with sluggish sales for the newest and greatest phone models because American consumers are increasingly resistant to paying for top of the line devices.

Apple, Samsung, and others are facing some of their biggest challenges ever delivering upgrade features deemed useful enough to encourage consumers to spend the more than $600 that many high-end phones now command in the marketplace. As blasé new features fail to deliver a “must-have” message to consumers, many are hanging onto their existing phones and refusing to upgrade.

The decision by wireless providers to stop subsidizing devices backed by two-year contracts have delivered sticker shock to consumers looking for the latest and greatest. The Apple iPhone 7, expected to be announced this month, will likely carry a price of $650 — a serious amount of money, even if your wireless provider or Apple agrees to finance its purchase interest-free for 24 months. Despite the fact wireless providers charged artificially higher service plan rates to recoup the cost of the device subsidy over the length of the contract, consumer perception made it easier to justify paying $200 for a subsidized phone versus paying full retail price and getting cheaper service.

As a result, consumers are strategically holding on to their cell phones longer than ever and avoiding upgrade fever just to score a lower cell phone bill. The Wall Street Journal reports that since T-Mobile started the trend away from device subsidies in 2013, Citigroup estimates the smartphone replacement cycle has now lengthened to 29.6 months, considerably longer than in 2011 when upgrades were likely even before the two-year phone contract expired.

The average combined monthly revenue (in $) earned per subscriber from service and equipment installment plan fees is still rising, despite the alleged “price war.” (Image: Trefis)

Wireless providers don’t mind the change since they endured fronting the subsidy cost to phone manufacturers and slowly recouped it over the next two years. Not dealing with a subsidy would make the accounting easier. But AT&T and Verizon Wireless both understood the average consumer doesn’t have a spare $650 sitting around for a new device, much less the nearly $2,500 it would cost to outfit a family of four with a new top of the line smartphone every two years. So they entered the financing business, breaking the cost of the device into as many as 24 equal installment payments. Instead of paying $672 for a Samsung Galaxy S7, Verizon Wireless offers 24 equal installments of $28. That would be a distinction without much difference from the old subsidy system except for the fact some carriers are trying to sell their equipment financing obligations to a third-party, allowing them to move that debt off their books as well.

In fact, wireless providers are doing so well under the “no-contract/pay full price or installments” system, Wall Street analyst firm Trefis has started to ask whether the so-called wireless carrier “price war” is just a mirage. The firm notes (reg. req’d.) all the four major carriers are doing well and collecting an increasing amount of money from their customers than ever before. Much of that added revenue comes from customers bulking up data plans and being forced to pay for unlimited voice and texting features they may not need. But Trefis also points to reined in marketing spending at the carriers, who no longer have to entice customers into device upgrades as part of a contract renewal.

Things are looking worse for phone manufacturers that have relied on revenue based on the two-year device upgrade cycle in the United States. Apple is under growing pressure as its iPhone faces declining demand. In the U.S. alone, analysts predict iPhone sales will drop 7.1% this year. UBS predicts an even less optimistic 9% drop, followed by a 5% drop next year, even after iPhone 7 is introduced. AT&T has already reported some of the lowest upgrade rates ever during the first three months of 2016.

Another clue consumers are planning to hold on to their smartphones longer than ever — sales of rugged cases and screen protectors are up, as are smartphone protection/loss insurance plan sales, according to AT&T senior VP Steven Hodges. Parents even expect their children to give their phones better care.

Customers “realized it was a $500 to $700 device,” Hodges said at an industry conference held in June. “As such, they started taking care of them differently. You tell a kid this is only $49, the kid is going to use his phone as a baseball at times.”

Other customers are looking forward to benefiting from a dramatically lower bill after paying off their device in 24 months.

Kristin Maclearie has an iPhone 6 and she wants to keep it for the long term, if only to see her Verizon bill drop once she finishes her monthly payments. She told the Wall Street Journal as long as it keeps working, “I’ll just hang onto the one I have,” she said. “Unless something really cool comes out…but they’re always similar.”

Comcast has confirmed new Altice USA and Charter Communications customers that used to subscribe to Cablevision, Time Warner Cable, and Bright House Networks will be able to continue accessing the free nationwide Cable WiFi roaming service, even though Altice and Charter are not members of the consortium that runs it.

“The Cable WiFi consortium remains in place following the recent merger and acquisitions activity,” a Comcast spokesperson told FierceCable. “Subscribers of each [company] that were previously entitled to use the CableWiFi hotspots continue to enjoy access. Access points that were made available by each [affected cable operator] continue to provide CableWiFi service.”

The network allows any Comcast, Cablevision/Altice USA, Charter/Time Warner Cable, Charter/Bright House Networks, and Cox Communications broadband customer to access a network of 500,000 nationwide Wi-Fi hotspots run by the five cable operators. Customers will know if they are in range of a hotspot by finding CableWiFi as an available connection. Broadband subscribers can log in using the same credentials they use when logging into their cable operator’s website.

It is unknown if Charter Communications or Altice USA will join the consortium directly, which would expand the network to cover legacy Charter customers and those signed up with Suddenlink, another Altice-owned operator.

Signage for an AT&T store is seen in New York October 29, 2014. REUTERS/Shannon Stapleton/File Photo

WASHINGTON (Reuters) – A federal appeals court in California on Monday dismissed a U.S. government lawsuit that accused AT&T Inc  of deception for reducing internet speeds for customers with unlimited mobile data plans once their use exceeded certain levels.

The company, however, could still face a fine from the Federal Communications Commission regarding the slowdowns, also called “data throttling.”

The U.S. Court of Appeals for the Ninth Circuit said it ordered a lower court to dismiss the data-throttling lawsuit, which was filed in 2014 by the Federal Trade Commission.

The FTC sued AT&T on the grounds that the No. 2 U.S. wireless carrier failed to inform consumers it would slow the speeds of heavy data users on unlimited plans. In some cases, data speeds were slowed by nearly 90 percent, the lawsuit said.

The FTC said the practice was deceptive and, as a result, barred under the Federal Trade Commission Act. AT&T argued that there was an exception for common carriers, and the appeals court agreed:

The panel reversed the district court’s denial of AT&T Mobility LLC’s motion to dismiss, and remanded for an entry of an order of dismissal in an action brought by the Federal Trade Commission under section 5 of the FTC Act that took issue with the adequacy of AT&T’s disclosures regarding its data throttling plan, under which AT&T intentionally reduced the data speed of its customers with unlimited mobile data plans.

Section 5 of the FTC Act contains an exemption for “common carriers subject to the Acts to regulate commerce.” 15 U.S.C. § 45(a)(2). The panel held that AT&T was excluded from the coverage of section 5 of the FTC Act, and FTC’s claims could not be maintained. Specifically, the panel held that, based on the language and structure of the FTC Act, the common carrier exception was a status-based exemption and that AT&T, as a common carrier, was not covered by section 5.

Asked about the appeals court ruling, a spokesman for AT&T said: “We’re pleased with the decision.”

An FTC spokesman said the agency has not yet decided whether to appeal. “We are disappointed with the ruling and are considering our options for moving forward,” FTC spokesman Jay Mayfield wrote in an emailed comment.

The company, however, could face action from the FCC. In June 2015, the agency proposed a fine of $100 million for AT&T’s alleged failure to inform customers with unlimited data plans about the speed reductions. AT&T has contested that proposed fine.

(By Diane Bartz; Editing by Paul Simao and Matthew Lewis; Additional reporting by Stop the Cap!)