Verizon to Refund Penalty Fees

A consumer protection lawsuit against Verizon Wireless has been settled, state Atty. Gen. Bill Lockyer announced Thursday.

Lockyer said the agreement will result in refunds to some customers as well as changes in the way phones are sold by New Jersey-based Verizon and one of its vendors, RadioShack Corp.

Under the settlement, consumers who bought their telephones under an oral rather than written contract and canceled their service after one year will be refunded a $150 early termination fee.

Verizon, formerly known as AirTouch Cellular, used oral contracts from 1997 to 2000. Lockyer said that under California law, oral contracts are restricted to a one-year period.

The lawsuit alleged the cell phone company engaged in unfair business practices by extending the oral contracts for two years and failing to inform consumers they could cancel in the 12th month of service without paying the early termination penalty.

The settlement also requires Verizon and RadioShack to inform customers in writing about the service term and rates for the cellular plan being purchased.

RadioShack is additionally barred from representing that service is available in a particular geographic area if service is not available. The two companies also must pay $1.5 million in fines and legal costs.

The lawsuit was filed in February 2000 by Lockyer, Monterey County Dist. Atty. Dean Flippo and the Los Angeles city attorney’s office. The settlement was approved Wednesday by San Francisco Superior Court Judge David Garcia.