Verizon's $.40 Mistake

If you're a Verizon Wireless customer, you may have noticed a new $.40 (40 cent) "Administrative Fee" on your latest bill, which will go into affect beginning October 1st. This new fee has raised a lot of online chatter in various forums about the possibility of getting out of 1 or 2 year contacts due to this new fee. The short answer is, "yes," you can indeed be excused of the contact without paying an early termination fee by calling Verizon within 60 days of receiving the notice.

The terms of service state:

UNLESS OTHERWISE PROHIBITED BY LAW, WE CAN ALSO CHANGE PRICES AND ANY OTHER CONDITIONS IN THIS AGREEMENT AT ANY TIME BY SENDING YOU WRITTEN NOTICE PRIOR TO THE BILLING PERIOD IN WHICH THE CHANGES WOULD GO INTO EFFECT. IF YOU CHOOSE TO USE YOUR SERVICE AFTER THAT POINT, YOU'RE ACCEPTING THE CHANGES. IF THE CHANGES HAVE A MATERIAL ADVERSE EFFECT ON YOU, HOWEVER, YOU CAN END THE AFFECTED SERVICE, WITHOUT ANY EARLY TERMINATION FEE, JUST BY CALLING US WITHIN 60 DAYS AFTER WE SEND NOTICE OF THE CHANGE.

Some people feel it's ethically questionable to cancel the service because of this charge, since a $.40 fee is hardly a "material adverse effect." In my case, that's actually $.80/month (2 phones, 2 contracts), and it certainly is a material adverse effect. It's materially adverse because it's costing me more -- the actual amount is irrelevant, whether or not I can afford it is irrelevant. In some cases, people are canceling only to sign back up again to receive a new phone -- in which case the new fees are part of the new contract. I suppose Verizon could argue a legal stance on each person that did this, though it would hardly be worth while. And in the end, they're still a Verizon customer. If Verizon really cared about this, though, they can simply not charge the fee on existing contracts, preventing this tomfoolery.

I cancelled my Verizon service, and it took some work -- meaning, I had to stand firm on quoting the terms of service and then the subsequent counter sell to keep me as a customer. I was even told that it "would look bad" to cancel the service, since I have established a good history with them by paying my bills on time, etc. (I might pause and think about that if I were closing my credit union account, or something that actually impacts my credit rating.)

Frankly, I haven't been too happy with Verizon's service. I recognize that nationally, Verizon has perhaps the best coverage, but it stinks in both my house and where I work. My home is a tad remote for being in a city, and coverage is spotty. I moved into the home 2 weeks after ordering service, and the area I live is a "green" zone on the coverage map so I assumed I would have great service and Verizon agreed when I asked. By the time I received the phones and had a chance to evaluate, I called to ask for help because I couldn't believe my reception was that bad (non-existent, actually). When I finally wanted to return the phone, I was a couple of days over the trial and was basically SOL.

The clincher for me, however, is that I was told by the rep that Verizon had a number of complaints in the area and, in particular, the rep commented that my phone had known reception issues. (Whether this is true or not, I have no idea.) The point is, this is all information I could've used earlier on. If indeed this data did exist, how great would it have been for the rep to say, "I don't recommend selecting that phone, there's a number of complaints and you're reception will be really bad." Not until I cancelled my service was I given the chance to select another phone, or did customer service express a concern with helping me resolve my issue. Too little, too late.

But I digress.

When Verizon introduces the new charge -- be it one cent or one dollar -- they're asking to change the rules, which isn't the paper that I signed. I said to the rep that they can remove the charge, and I'll be bound to the 1 year contract and I'll continue my service. But if they keep the charge, I won't accept it and demand, per the terms of my agreement, to be released from my contract. I see no ethical problem with this -- Verizon could choose to honor their original contract and they've chosen not to. I have no plans to go back unless they get better service in my area.

In fact, if anything, Verizon is ethically challenged by making the fee virtually hidden, and only by scouring the terms of service is it revealed that it is, indeed, the customer's right to cancel without an early termination fee. And even then, you'll need to be prepared to argue a bit on the phone. How great and upfront would it be to print this in big letters on the first page of the bill: "Because this new fee does result in a nominal price increase, you may cancel your service with Verizon and not be charged an early termination fee, according to the terms of service."

Instead, Verizon is playing a numbers game. A certain percentage of the people are without contracts but still retaining service. If 80% of the people are within contract boundaries, how many are within 3 months of their contracts expiring? 40% maybe? So of the people remaining that have "meaty" portions of their contract remaining (the ones that Verizon will take a loss on if they bail), how many will notice the charge, and then how many will know they have a right to cancel? How many of them will actually cancel?

My guess is very few, otherwise they'd only impose the fee on new contracts. I wouldn't go as far as saying they're pulling the wool over people's eyes, but they haven't done the customer any favors by making their options known.

Comments (6) -

Malaise
Malaise
9/8/2005 10:52:41 AM #

You GO GIRL!

Brian
Brian
9/8/2005 4:02:22 PM #

Hehe...cute.  Better make sure you don't leave your workstation unlocked :}

James Byrd
James Byrd
9/8/2005 10:26:02 PM #

I'm used to having no reception, but then I live in the middle of Nowhere North Idaho.



Can you hear me now? Well, no, actually.



It just goes to show you how far we have to go with all this vaunted technology when you can't get a cell signal right outside of Seattle.



As for letting customers know their options, you can bet Verizon is not about to call attention to how easy it would be for you to get out of your contract. I'd almost think you haven't spent any time around marketers, but I know better Wink



From a customer service perspective, it should not have been necessary for you to use the $.40 mistake to get out of your contract. The real reason you ditched it is because your reception stank. If your reception had been great, you probably would have ignored the extra charge.



As far as I'm concerned, your poor reception was a failure to perform on their part, regardless of what they charge for the service. Of course, the marketers only care about customer acquisition and retention, not customer satisfaction. You and I would think those two are closely related, but not all companies think that way.



In any case, congratulations on successfully wriggling out of their grasp!

Michael K. Campbell
Michael K. Campbell
9/9/2005 5:35:38 AM #

Seriously, any time you can screw with the phone company - DO. They deserve to have to waste oodles of time and energy - just because they suck so bad. Seriously, it's hard to get a sentient human being on the other end of the line when you call in needing help. And when you DO get some one who gives a crap about your problem - they're powerless to stop.



So yeah, cancel. Just to give them a fit. Just because it will look bad on their financial records.



And what the heck is an admin fee anyhow?

Brian
Brian
9/9/2005 4:25:08 PM #

Spot on, James.



It is exactly about acquisition and retention, not about satisfaction. Had _any_ effort been made to satisfy me earlier on, I would've been more loyal.



Marketing ... yeah, I no stranger to interesting marketing folk, and often times it's really ingenious stuff they come up with. But sometimes their tactics are a bit questionable. (And sometimes it's just the individuals who are a bit questionable, but I won't mention names. They know who they are.)



All shades of grey. A less "in-your-face" example: is it ethical for Coldwater Creek to advertise a 50% off the entire website while removing some of the merchandise during a sale? Sure it's legal, and even stated in fine print. People don't care, though, because it's a win-win situation.  I'd imagine most people wouldn't mind this approach.  But at what point does marketing "spin" start to etch away at integrity?   It's one thing to stretch reality a tad, it's another to lie and deceive, and everyone has their own opinions as to how far you have to go to cross that line.



OK, before I sound too much like Mike, I'm done Smile

Forrest  tha houshang hater
Forrest tha houshang hater
11/22/2005 12:14:58 PM #

YES damn verizon hahaha getting a new phone for meeeself! thanks!

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