Starting next week, Verizon will double the early-termination fee for smartphones. That is, if you get a BlackBerry, Android or similar phone from Verizon, and you decide to switch phones before your two-year contract is up, you’ll be socked with a $350 penalty (it used to be $175).
This fee drops slowly over time ($10 a month), but after two years, it’s still $110. If the premise of the early-termination fee is to help Verizon recoup its original cost of the phone (see my analysis here //bit.ly/pOkXz), shouldn’t the fee go down to zero at the end of your contract?
This move doesn’t help Verizon’s reputation for steep pricing and aggressive gouging.
What bothers me more, though, is another bit of greedy nastiness that readers both inside and outside Verizon have noticed.
Here’s one example, from a Verizon customer:
“David, I read your posts about how the cell carriers are eating up our airtime with those 15-second ‘To page this person, press 5’ instructions, but I think Verizon has a bigger scam going on: charging for bogus data downloads.
“Virtually every bill I get has a couple of erroneous data charges at $1.99 each—yet we download no data.
“Here’s how it works. They configure the phones to have multiple easily hit keystrokes to launch ‘Get it now’ or ‘Mobile Web’—usually a single key like an arrow key. Often we have no idea what key we hit, but up pops one of these screens. The instant you call the function, they charge you the data fee. We cancel these unintended requests as fast as we can hit the End key, but it doesn’t matter; they’ve told me that ANY data–even one kilobyte–is billed as 1MB. The damage is done.
“Imagine: if my one account has 1 to 3 bogus $1.99 charges per month for data that I don’t download, how much are they making from their 87 million other customers? Not a bad scheme. All by simply writing your billing algorithm to bill a full MB when even a few bits have moved.”
As it turns out, my correspondent is quite correct. My last couple of Verizon phones did indeed have non-reprogrammable, dedicated keys for those ridiculously overpriced “Get it now”-type services that I would never use in a million years.
At about the same time, I got a note from a reader who says he actually works at Verizon, and he’s annoyed enough about the practice to blow the whistle:
“The phone is designed in such a way that you can almost never avoid getting $1.99 charge on the bill. Around the OK button on a typical flip phone are the up, down, left, right arrows. If you open the flip and accidentally press the up arrow key, you see that the phone starts to connect to the web. So you hit END right away. Well, too late. You will be charged $1.99 for that 0.02 kilobytes of data. NOT COOL. I’ve had phones for years, and I sometimes do that mistake to this day, as I’m sure you have. Legal, yes; ethical, NO.
“Every month, the 87 million customers will accidentally hit that key a few times a month! That’s over $300 million per month in data revenue off a simple mistake!
“Our marketing, billing, and technical departments are all aware of this. But they have failed to do anything about it—and why? Because if you get 87 million customers to pay $1.99, why stop this revenue? Customer Service might credit you if you call and complain, but this practice is just not right.
“Now, you can ask to have this feature blocked. But even then, if you one of those buttons by accident, your phone transmits data; you get a message that you cannot use the service because it’s blocked–BUT you just used 0.06 kilobytes of data to get that message, so you are now charged $1.99 again!
“They have started training us reps that too many data blocks are being put on accounts now; they’re actually making us take classes called Alternatives to Data Blocks. They do not want all the blocks, because 40% of Verizon’s revenue now comes from data use. I just know there are millions of people out there that don’t even notice this $1.99 on the bill.”
Well.
Look, it’s very simple.
The more Verizon gouges, the worse it looks. Every single day, I get e-mail from people saying they’re switching at the first opportunity, or would if they could. In time, the only people who will stay with Verizon are people who have no coverage with any other carrier.
Every company’s dream, right? A base of miserable customers who stick with you only because they have no choice.
I realize that it’s a business, that Verizon exists to make money. But the part I don’t get is, why doesn’t Verizon calculate the business cost of making customers unhappy? Surely some accountant can show that customer anger over these fees and dirty button tricks translate into negative corporate image, and therefore lost business.
Why wouldn’t it be a hugely profitable move to start pitching yourself as the GOOD cell company, the one that actually LIKES its customers?
Here are four baby steps: (1) Let us bypass the 15 seconds of pointless voice mail instructions (Verizon is the only carrier that never responded to my campaign; see //bit.ly/nIgE2).
(2) Make your early-termination fee reflect your actual cost, rather than being a profit center in its own right.
(3) If a data connection is obviously an error—under 10 seconds, say—don’t bill for it.
(4) And for heaven’s sake, quit imposing your own profit-center buttons on our cellphone designs. If we want to go online for $2 a megabyte, we’ll find a way.
(UPDATE: A reader notes that his AT&T phone has exactly the same buttons and he gets charged exactly the same $2 for an accidental press. The $350 termination fee is a Verizon-only element, but the $2 accidental-data charges may actually be industry-wide. Readers: Can you confirm that it’s the same deal on Sprint and T-Mobile?)
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