Verizon Wireless customers who subscribed to the company’s legacy America’s Choice wireless plans are receiving notification of a pending class action settlement between Verizon Wireless and two law firms that will bring a handful of free calling minutes to impacted customers while netting up to $6 million for the attorneys bringing the suit.

At issue was a dispute over whether Verizon Wireless properly provided roaming service for customers under America’s Choice I and II calling plans.  The plaintiffs claimed the company charged roaming rates for calls that should have been covered by the wireless plans at no additional charge.  Verizon Wireless denies the claims, but has agreed to settle the case.

Unfortunately for average consumers, the proposed award is a pittance — 25 additional wireless calling minutes that you can use for a period of one year if you go over your monthly minutes allowance.  Former Verizon Wireless customers, and those who don’t want that award, can alternatively select a Verizon calling card good for “40 units” of domestic or international long distance, good for two years.  That amounts to around 40 minutes of calling in North America, considerably less for international calls.  The only cash being handed out goes to three Ohio plaintiffs, who will receive up to $20,000 each.  But the real prize goes to two Cincinnati law firms — Strauss & Troy and Statman, Harris & Eyrich LLC, who are seeking a payout of up to $6 million.

The firms defend their request claiming they spent more than five years in litigation with Verizon Wireless, which has long since discontinued signing up new customers to either calling plan.  While a judge reviews the proposed settlement, Verizon has taken to e-mailing most impacted customers.  If you missed yours, you can track the progress of the suit on the official website for the Cowit v. Cellco Proposed Class Action Settlement.  You can also claim your minutes starting now, before the deadline of November 8, 2011.

[flv width=”596″ height=”356″]http://www.phillipdampier.com/video/NBC ATT Internet Overcharging 5-24-11.flv[/flv]

A new consumer investigation by NBC’s Today Show found that AT&T may be systematically overcharging customers for their broadband usage, fleecing customers for countless sums in overlimit fees.  With no government oversight to guarantee usage measurements are accurate and fairly measure usage, customers have to take AT&T’s “word” for the accuracy of their billing, and now that the company has extended Internet Overcharging to its DSL and U-verse customers, AT&T could earn millions in ill-gotten gains if the claims of overestimated usage are true.  AT&T responded, claiming consumers have a misunderstanding of how data is consumed and billed.  NBC quotes AT&T as saying most customers who exceed their limits do not incur fees, which will come as quite a surprise to customers who are routinely billed $15 or more for excessive use charges on wireless plans.  Thanks to Stop the Cap! reader Scott for sharing the news.  (4 minutes)

AT&T customers using modified phones to share their 3G wireless connection with other devices are complaining about the company’s warning that if they don’t cease tethering their phones, they will be automatically enrolled in the company’s premium $45 a month DataPro for Smartphone Tethering plan next week.

An attorney tells Stop the Cap! if the company does that, his firm will consider filing a class action lawsuit against the company for forcing customers into service plans they did not enroll in themselves.

This controversy comes to those who have been using “jailbroken” phones, modified to restore features blocked at the factory by North American cell phone carriers.  Among the most coveted restored features is turning your phone into a mini Wi-Fi hotspot or allowing the phone to connect directly to other equipment, sharing your 3G connection with other devices, such as a laptop, iPad, or iPod.  While many phones include this capability, most carriers in the United States and Canada disable it for those not enrolled in an extra cost add-on plan covering “tethering.”  AT&T offers two such plans — $45 a month for 4GB of usage, or $25 a month for 2GB.

For several years, some AT&T customers have used tethering as a convenient way to bring connectivity to devices out of reach from Wi-Fi or a home broadband connection.

Jonathan in San Francisco shares with Stop the Cap! he is grandfathered in on an unlimited use data plan from around the time the first smartphones entered the marketplace.

“AT&T even sold me the tethering equipment at the same time they sold me the data plan, which they promised was unlimited,” Jonathan says.  “I don’t buy their subsidized phones — I buy my own unlocked phones at full retail price every few years, and AT&T has allowed me to keep my plan the way it is.”

Until he received a notification message from AT&T claiming his account “may need updating.”

AT&T says customers tethering their phones must pay for both a data plan -and- a tethering plan if they want to use the feature, a condition not part of Jonathan’s plan.

“My plan with AT&T says nothing about an extra tethering plan; it says I have unlimited data — something I do not abuse,” Jonathan says.

He is particularly upset that if he uses his phone as he always has, AT&T will slap a $45 additional monthly fee on his phone bill.

“Even worse, when I called AT&T to complain, they told me my plan is so old, they would automatically ‘upgrade’ my service plan to one that costs more and delivers less, effective Monday,” he tells us.

It turns out some customers on legacy plans cannot easily add the tethering option without abandoning the plans they have carefully held onto for years.

“The lady I spoke with said their computer billing system cannot add the feature to my account because it is so old,” he said.

Janie, one of our readers in Seattle, noticed AT&T “‘graciously’ wants to auto-enroll you in their most expensive tethering plan, not the cheaper $25 one.”

“My cousin is lucky enough to still have their $30 a month plan which provided 5GB a month, but they discontinued it for new customers so they could raise prices,” Janie writes.

Janie is upset because it was an AT&T reseller that charged her $30 extra to enable the feature AT&T now wants her to pay even more to use.

“I have no idea what ‘jailbreaking’ is, or that I was doing anything wrong — I bought the phone from an AT&T authorized retailer and had no idea there was even a problem until I called and they lectured me about ‘stealing’ service,” Janie says.  “The company disgusts me and I have never been accused by anyone of stealing, so I am canceling with them when my contract is up.”

Janie is not the only customer to have had her phone modified by someone representing the company.

We found another customer who paid an employee at an official AT&T store to modify his phone.  The employee told him if he keeps monthly usage under 10GB per month, no red flags would be raised, a statement that some might consider a red flag itself.

Just how AT&T tracks down its tethering customer-underground remains a mystery, but some have speculated usage may have been the major contributing factor.  Not everyone who quietly tethers their AT&T phone has gotten the notification message, while many of those using tethered phones as their only Internet connection have.

“If you are using your tethered AT&T phone on a laptop and running up 25GB of usage, AT&T will notice if they look,” an employee tells us privately.  “AT&T can run an audit on data usage and discover considerable amounts of money being left on the table by customers not enrolled in the appropriate plan.”

One lawyer that has targeted AT&T in the past said his firm is carefully watching to see if AT&T follows through on its auto-enrollment threat.

“We’ve found judges and government officials take a very dim view on automatically enrolling customers in anything that costs money without their direct, informed consent,” the attorney who is not authorized to speak publicly on behalf of his firm tells us.  “We are obviously taking a close look at this.”

AT&T’s e-mail notification text is below the jump.

… Continue Reading

A snake in the grass?

You used 50 kilobytes of data visiting a web page on your iPhone, but AT&T claims the site actually consumed six times that — 300 kilobytes, for which the carrier overcharged you for access.

A major point of contention for consumers facing Internet Overcharging schemes is that the same company with a vested interest in maximizing revenue from such schemes also administers the meter that measures how much you used.  There is no oversight or independent verification.

In a lawsuit filed this week, AT&T Mobility faces accusations it is systematically overcharging iPad and iPhone users for data services many never used.

Patrick Hendricks claims AT&T’s Internet Overcharging “was discovered by an independent consulting firm retained by plaintiff’s counsel, which conducted a two-month study of AT&T’s billing practices for data usage, and found that AT&T systematically overstate web server traffic by 7 percent to 14 percent, and in some instances by over 300 percent.”

The lawsuit compares the company’s billing system to a gas pump that charges for a full gallon when it only dispenses nine-tenths into your tank.

Hendricks’ suit also claims the same independent testing firm confirmed AT&T charges for data usage even when phones and iPads were disabled for data sessions, push notifications, location services, and other data features.  After 10 days, the firm found AT&T had billed 35 data transactions totaling 2,292 kilobytes of usage, akin to being billed for gas when you never even pulled into the station.

The complaint admits the individual overcharges are relatively small for most consumers, but collectively they earn massive profits for AT&T.

“AT&T has 92.8 million customers. In the fourth quarter of 2010, AT&T reported its wireless data revenues increased $1.1 billion, or 27.4 percent, from the year-earlier quarter, to $4.9 billion,” the suit claims. “A significant portion of those data revenues were inflated by AT&T’s rigged billing system for data transactions.”

The lawsuit is seeking class action status and refunds of alleged overcharging for impacted customers.

The firm handling the case, Bursor & Fisher, has tangled with cell phone providers before, winning cases against Verizon, Sprint and T-Mobile.  The firm is also exploring a lawsuit against Sprint on behalf of Evo owners who paid a $10 surcharge on top of an “unlimited” data plan.

Clearwire’s often-unclear “network management” policies are the subject of a lawsuit filed yesterday in Seattle seeking class action status.

Angelo Dennings vs. Clearwire Corporation was filed in the Western District of Washington federal court, and seeks refunds for consumers who were mislead by the company’s failure to disclose its network speed throttling and usage limitations, and charged early termination fees when subsequently canceling service.

Clearwire promises that its high-speed Internet service provides a “fast” and “always on, always secure” Internet connection allowing users to “[d]ownload pictures, music and videos.” But Clearwire does not provide an “always on,” “high-speed” connection as it promises. Clearwire purposefully slows the connection of its users because it cannot accommodate the high volume of traffic. Clearwire engages in a practice known as “throttling,” which is the intentional delay and/or blocking of Internet communications. This practice deprives Clearwire customers of the ability to “[d]ownload music and videos,” and leads to slow connection speeds.  Clearwire engages in throttling at times when demand for Internet use is highest, beginning at approximately 7:30 p.m. and ending at about 1:00-to-2:00 a.m.

If users attempt to cancel their service, Clearwire claims that, pursuant to its “contract” with them, it is entitled to collect an early termination or a re-stocking fee. The “contract” referred to by Clearwire is not a contract between it and its customers. The contract between Clearwire and its customers is simply that the customers will pay for, and Clearwire will provide, “unlimited” Internet usage at certain speeds, depending on the speed and payment plan selected in Clearwire’s stores, kiosks, or online.

The remaining “terms” invoked by Clearwire at its convenience are embedded in a document that consumers never see prior to subscribing to Clearwire’s service. Clearwire sells its services in its stores, kiosks at shopping centers, and online. Clearwire’s stores and kiosks do not have copies of this “contract” on hand for potential subscribers to read before they “agree” to its terms. Users who subscribe through Clearwire’s website never see the contract either because the link to it is at the bottom of a page, in substantially smaller font and lighter shade than all of the other text on the page. The text states: “Want to read the fine print (and who doesn’t read the fine print?) It’s all there in the CLEAR Legal Index.” No one wants to read fine print legalese and almost no one does. The statement is obviously and sharply ironic, and mocks anyone who may have been fussy enough to have considered continuing.

Despite not showing its terms to consumers, Clearwire refuses to allow users to cancel their service without paying the unconscionable fees it claims it is owed under this “contract.” These fees include an early termination fee (“ETF”), which penalizes consumers that want out before the end of the two-year term. Although Clearwire breached its contract with its customers, Clearwire insists on the payment of this ETF when customers realize they are not getting what they bargained for.

The suit argues that Clearwire has oversold its wireless broadband network, and allegedly quotes a company representative at one point telling Dennings, “Clearwire had signed up more customers than its cell towers could accommodate, and that therefore it was ‘managing’ users’ accounts.”

Attorney Clifford Cantor argues in the filing that Clearwire reduces customer speeds to 300kbps or lower when their network is congested, making the service unsuitable for most broadband applications.  Dennings, who lives near Ft. Worth, Tex., was outraged to learn Clear sold him a home and mobile broadband account that was advertised as a replacement for wired cable or DSL broadband, but was left with service he considered largely useless when throttled.  Even more upsetting, the suit alleges, Denning was asked to pay a $219 early contract termination and restocking fee when he tried to cancel service over the matter.

Cantor is asking for a court ruling declaring Clear’s policies to be unconscionable, attorneys’ fees of at least $5,000, and refunds for all impacted subscribers.

Thanks to Stop the Cap! reader Michael in Chicago for sending along a copy of the lawsuit.  He runs the “Clear/Clearwire internet not as advertised” Facebook group.