Verizon and Alltel Pay Up For 'Free' Ads

Verizon Wireless and its subsidiary Alltel Communications have agreed to pay $1.5 million to the state of Florida to resolve an investigation by the state Attorney General into deceptive Web ads for "free" ringtones.

The settlement marks the latest chapter in Attorney General Bill McCollum's longstanding investigation into Web ads that promise free mobile content, but actually are for paid subscription services. McCollum has previously settled with other players in the mobile content market, including AT&T and AzoogleAds.

The authorities have alleged that consumers were tricked into providing their cell numbers in exchange for supposedly free ringtones or other content, and were then billed monthly fees for subscription services.

The Verizon deal, termed an "assurance of voluntary compliance," deal calls on Verizon to pay $1 million and Alltel to pay $500,000. (Verizon purchased Alltel last year, but the settlement addresses the companies separately.) The telecom also will offer rebates to consumers. Press reports say that those rebates could come to $30 million ($24 million for Verizon and $6 million for Alltel), but a Verizon spokesman said those numbers "have absolutely no basis in reality."

In addition, Verizon agreed to require third-party advertisers to prominently disclose the costs of ringtones, horoscopes, wallpaper and other mobile content. A Verizon spokesperson said the company already takes such steps. "Our agreement with the Florida AG reflects business changes we have made over the past few years to ensure that third-party content is marketed, advertised and billed accurately to consumers," he said.

Tags: legal, mobile, telecom
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1 comment about "Verizon and Alltel Pay Up For 'Free' Ads".
  1. James Roland from CSCC , June 27, 2009 at 4:31 p.m.

    I wonder how many people either will not know that they should claim, or will not bother to claim back the hidden charges. This is a prime example why I will not sign a contract with a cell carrier. It really seems sometimes as if the descriptions of charges are intentionally indiscernible. So it’s easy to see how this could happen to literally thousands of people. And I'm sure Verizon is not the only company involved in this kind of scheme.
    I prefer to use prepaid phones where I pay for what I use, with no hidden charges added. For instance: my Straight Talk plan will give me 1000 minutes, 1000 texts and 30mb data for $30. Not $35-$40 after all the added hidden charges! And with prepaid phone options now often cheaper than contracts there really is no reason to sign on the dotted line anymore.