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.

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