A California woman is suing Verizon Communications for selling her faster Internet service, at a higher price, the company cannot actually deliver.

Patricia Allen of Santa Monica filed suit in Los Angeles after Verizon sold her an upgrade to her current DSL plan that turned out to be anything but.  Allen was paying $23.99 a month for 768kbps service, but in March, 2011 Verizon promised they could give her a speed upgrade to 1.5Mbps for $11 more per month.

Exactly one year later, Allen learned her “upgraded service” performed no better than her original Internet plan, which itself only managed around 500kbps, and called Verizon to complain.

Verizon technicians quickly responded Allen could never get the benefits of a faster speed plan because she lived at least two miles from her local Verizon central office.  DSL speeds degrade with distance and can also be impacted by the quality of the landline network Verizon maintains in southern California.  Because Allen lives too far away to receive anything better than 700kbps service, she was advised to downgrade her $34.99 DSL plan back to the one she started with.

Allen requested a refund for the extra $11 a month she was paying for the last year for promised speed improvements Verizon never delivered, but the company flatly refused her request.  Allen is now taking her case to the California courts, and her legal representatives are seeking to have the case designated a class action covering all Verizon landline customers in California who, like Allen, are paying for Verizon-marketed speed upgrades they actually cannot receive.

The suit claims Verizon is well aware it is selling speed upgrades to customers who live too far away from the company’s facilities to actually benefit from the enhanced service, and pockets the proceeds without delivering improved service.  The suit alleges Verizon is engaged in unethical, unscrupulous, immoral, and oppressive business conduct in violation of California state law.

Verizon’s spokesman Rich Young called the lawsuit “baseless and without merit.”

Verizon Class Action Copy

Verizon Communications has agreed to full restitution, as part of a class action settlement, for unauthorized third party charges on their customers’ phone bills.

Known in the industry as “cramming,” extra unauthorized fees pop up on phone bills for voicemail, dating lines, ringtones, or 800 numbers many customers have no idea they even had.  Almost all of the charges come from independent companies unaffiliated with Verizon.  But critics charge phone companies have been ignoring abusive cramming practices, in part because they share a percentage of money billed and collected from customers.

Deceptive cramming charges are often hard to spot on phone bills replete with cleverly-named-to-be-obscure surcharges, taxes and fees.  Many crammers deliberately keep descriptions about the services they are billing as vague as possible, sometimes appearing as “special services charge,” “voicemail access,” or even “monthly charge.”  Many ratepayers assume it is all just a part of the cost of having phone service.

A class action lawsuit against Verizon accused the company of doing little to stop unauthorized third party fees, and many customers afflicted by them report getting them off their bills is not as easy at it should be.

“When I had a mysterious $14.95 monthly fee for ‘voicemail,’ a service I knew I didn’t have, Verizon required me to fight with some Bermuda-based company to get the charges reversed, and they just kept repeating I must have authorized the service because it was on my bill,” reports Stop the Cap! reader Kevin Sessly. “They wear you down until you just pay the bill.”

Sessly eventually won refunds after contacting his state’s public utility regulator.

As part of the settlement, Verizon customers will be entitled to full refunds of all unauthorized third party charges from April 27, 2005 through Feb. 28, 2012.

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

Verizon has also agreed to adopt an “opt in” system where customers must first allow third party charges on their phone bills before a company can bill your account.  Currently, customers are subject to third party billing unless they specifically block it with their telephone company.

“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.”

Crammers have used a variety of tricks to bill phone customers for services they never ordered.  Completing sweepstakes or contest forms with a phone number is one common method, asking for a cell phone number as part of a “free ringtone offer” is another.  Many services also trick customers into signing up with free offers or discounts on other products or services.  Many customers forget to cancel before the trial ends, resulting in recurring charges.

Customers will be able to recover the full amount of the unauthorized charges, if they have copies of their past phone bills, or obtain a quick $40 flat-rate refund by submitting claims at www.verizonthirdpartybillingsettlement.com or calling toll-free 1-877-772-6219.  Both services should be up and running by March 9.

Non-Verizon customers can still take steps to protect themselves from unauthorized charges by calling their provider and requesting a block on all third-party charges.  This service is provided at no charge.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/ABC News Phone Cramming How to Get Money From Verizon Settlement 3-5-12.mp4[/flv]

ABC News reports on the Verizon settlement and steps consumers can take to identify cramming and obtain refunds for unauthorized charges.  (2 minutes)

Angry Netflix investors upset that they did not receive advance warning the online and DVD rental movie service was facing the expiration of several important content contracts and would have to pay substantially more to renew them have launched a class action lawsuit against the company.

The City of Royal Oak Retirement System, which holds a substantial number of shares in the company, hired Robbins, Geller, Rudman & Dowd LLP, who filed the suit in U.S. District Court Friday on behalf of the pension fund and similarly situated investors.

The suit claims Netflix management misled investors with plans to grow the business while the company was actually preparing to significantly increase prices to cope with the increased licensing costs to stream content.

Netflix management in July announced it was effectively separating its streaming and DVD-by-mail businesses by charging individual subscription rates for each, resulting in a 60 percent rate hike for some subscribers.  Then it suggested it would spinoff its DVD rental business to its own division, to be called Qwikster.  Neither plan impressed customers, and led many to downgrade or discontinue service.  It did nothing for Netflix’s stock price either.  The stock tumbled from a July price of $291.27 to $94.79 last week.

The suit charges:

“At the beginning of the class period, Netflix was facing increasing competition for streaming business, and content providers were exploring new ways to distribute their content and/or maximize their licensing fees. Rather than fully disclose the devastating cost increases which were then threatening Netflix’s entire business, the defendants talked about [their] ability to grow.”

Several Netflix executives’ personal portfolios have grown as a result of selling their personal shares in the company, netting more than $90 million before the rate increase was announced, a fact the lawsuit also prominently mentions.

Motorola cable modem

A California federal judge has thrown out most of a class action lawsuit that charged Comcast with marketing broadband service plans without disclosing extra fees for cable modem equipment.

The head plaintiff, Athanassios Diacakis, claimed Comcast sold Triple Play promotions over the phone and in the media without mentioning customers would also have to pay additional fees to lease a cable modem.  Diacakis accused the cable operator of violating California’s tough false-advertising laws by not fully disclosing all fees and surcharges while explaining the promotion.

U.S. District Judge Saundra Brown Armstrong disagreed, however, dismissing most of the plaintiffs claims.  The judge didn’t declare Diacakis’ claims untrue, but ruled they were insufficiently documented to proceed to trial.

“The [amended complaint] fails to specify when or where Comcast advertisements were viewed, the content of those advertisements, or which of them in particular Plaintiff relied upon,” Armstrong wrote.

Diacakis is free to submit an amended complaint if he wishes to proceed with his class action case.

Comcast charges customers $7 a month to lease cable modem equipment, but invites customers to purchase their own cable modems to avoid rental fees.  Many customers do just that, choosing from several dozen approved models Comcast will provision for broadband customers.  The cost to purchase cable modem equipment ranges from $50-125 on average, depending on the cable modem selected.  It takes less than two years for purchased cable modems to effectively pay for themselves at Comcast’s current rental rate.

Storm damage in eastern Massachusetts. (Courtesy: WGBH Boston)

The northeastern United States got more than its fair share of severe storms these past few months.  Remnants of Hurricane Irene caused severe flooding, heavy rainstorms that followed didn’t help.  But one of the worst of all was the Halloween Nor’easter that left serious wind damage in some areas, heavy snowfall in others, leaving customers without power, phone, cable, and broadband service for days, if not weeks.

Telecommunications companies including Cablevision, Charter Communications, Comcast, Cox Communications, Dish Network, Time Warner Cable, and Metrocast Communications of Connecticut are under fire across the region for not providing automatic service credits for impacted customers.  Charter and Comcast are both facing a class action lawsuit filed last week by a Massachusetts law firm that accuses the cable operators of “gouging” their customers by not automatically crediting affected subscribers for lost service.

Jeffrey Morneau of Springfield, Mass. law firm Connor, Morneau & Olin says up to 1.2 million Charter and Comcast customers were without service, but the companies will only provide credits on a case-by-case basis, and only if customers request them within a short time after the outage occurred.

“If you pay for a service and you don’t get it, the company can’t keep your money,” Morneau said.

Stop the Cap! readers in Massachusetts and New Hampshire report Comcast will grant reasonable service credit requests, assuming you get through to ask for them.

“Hold times are epic,” reports Tom Turlin, a Comcast customer in Massachusetts.  “I managed to get my credit by using their web contact form instead.”

Most providers require consumers to request credits for outages within 30-60 days of the service interruption, and time is running out for Nor’easter credits.

“Most people think they will only get 50 cents back so why bother, but actually with today’s huge cable bills, credits can be substantial,” Turlin says. “I received almost $15 back on my bill.”

Only AT&T, Connecticut’s largest phone company, agreed to automatically credit customers the company determined were without service for at least 24 hours.  Customers who don’t receive credit automatically can appeal to the company for credit they believe they are entitled to receive.

Here’s how different companies are responding:

AT&T: “We will give U-verse TV customers in Connecticut who experience a service outage for longer than 24 hours a pro-rated credit,” AT&T said. “In addition, we will voluntarily give similar credits for U-verse Voice and U-verse High Speed Internet service customers who experienced a service outage for longer than 24 hours. Customers are not required to take any action: the credits will be applied automatically on the customer bill for impacted customers within the next several billing cycles.”

Cablevision: “While state law provides for consumer credits for qualifying outages for cable service only, Cablevision has been providing a credit to customers on an individualized basis for all their services,” Cablevision said. “Customers will be credited when they notify us that they had a service outage. We are extending our normal period to request refunds to 45 days from the date of the storm.”

Charter: Customers must call or visit the cable company offices in person to request service credit.  “We are providing credit to customers for the entire time they were without service, from the time they lost power to the time their Charter services were fully restored, and we are providing credit for all services,” Charter said.

Comcast: “In order to receive a credit, a customer must contact Comcast and identify the time period during which they did not have access to Comcast services,” Comcast said.

Cox: “We need our customers to call us after their service is restored to report that they were without Cox services, and for how long,” Cox said. “We then credit their accounts from the time of the service outage until service was actually restored.”

DISH Network: The satellite provider is waiving service and equipment fees for consumers who need their equipment realigned, reinstalled or repaired due to the storm. “DISH subscribers who indicated that they were without service due to the storm were provided a credit for their time without service,” DISH said. “In addition, DISH subscribers who needed to suspend their service due to storm damage were allowed to do so at no charge.”

MetroCast Communications of Connecticut: It will provide customers with a refund on their next invoice after contacting the company. “The credit equals a prorated amount of the affected customer’s monthly charges for all MetroCast services, calculated based on the number of days during which such services were interrupted, and are included in the customer’s next invoice,” MetroCast said.

Time Warner Cable: Customers must contact the cable company online, by e-mail or phone and request credit for the number of days they were without service.  Most service credit requests that can be verified are granted within hours, and will appear on the next billing statement.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/WSHM Springfield City councilor Comcast disagree on cable rebates 11-21-11.mp4[/flv]

WSHM in Springfield covers the ongoing dispute city officials have with Comcast, who is refusing to automatically provide storm credits to customers impacted by the October Nor’easter.  (2 minutes)