Verizon (VZ) , the leading mobile provider in the U.S., recently had its feet held to the fire over a fee it charges its mobile customers; and the controversy just took an unexpected turn.
Last year, Verizon faced a class-action lawsuit for allegedly “misleading” customers about its Administrative and Telco Recovery Charge. According to the company’s website, the charge helps to “defray and recover certain direct and indirect costs” its agents incur.
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Customers in the lawsuit argued that the fee, which was $3.30 per line at the time, was not disclosed in the monthly price of their wireless plans and that there were alleged discrepancies in what Verizon claimed the charge was actually for.
Related: Verizon quietly makes a change that just made customers very angry
“The first time Verizon customers learn about the existence of the Administrative Charge, or the amount of the charge, is on the customer bills, which they begin receiving only after they have signed up for wireless service and are financially committed to their purchase and cannot cancel without penalty,” reads the lawsuit. “Verizon then omits or misrepresents the so-called Administrative Charge on its customer bills to further its scheme.”
Verizon settled the lawsuit in October for $100 million, agreeing to send affected customers payouts starting at $15, plus an extra $1 for each month they received Verizon postpaid wireless or data services and were charged that administrative fee. Payouts are capped at $100.
Verizon customers are frustrated after receiving settlement payments
However, customers are flagging that their settlement payments are falling well below the $15 minimum that was promised.
In a recent Reddit post, a Verizon customer shared a screenshot of a Verizon Administrative settlement payment they received in their PayPal account, which totals $7.85.
“Got my Verizon settlement check today. Thanks, lawyers,” wrote the customer in the post.
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In response to the post, other Verizon customers also claimed that they also received payments below $15.
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One customer even shared a screenshot in a post on social media platform X to show that he received a Verizon Administrative settlement payment of $2.37 to his prepaid Mastercard.
“Got my pay out from the Verizon lawsuit !!! These lawsuits are a joke, waste of time,” said the customer in the X post.
In an emailed statement to TheStreet, Verizon said that the lower-than-expected dollar amounts of the payouts are due to the high number of customers who applied for the settlement.
“When we first announced this voluntary settlement, we said that we expected that the settlements would be between $15 and $100 — depending on how many people applied for the settlement,” said Verizon in the statement. “Since more people applied than anticipated, the final dollar amounts are at the lower end of expectations.”
Customers previously called out Verizon for recent price hike
The low settlement payments come after Verizon faced backlash from customers last month for quietly increasing its Administrative and Telco Recovery Charge from $3.30 to $3.50.
Related: T-Mobile accused of ‘illegally’ charging customers a hidden fee
Customers claimed that they were unaware of the price increase and only found out about it after checking their latest phone bill. Verizon confirmed the $0.20 price increase in a statement to TheStreet in December.
The fee increase follows Verizon’s decision in March last year to raise the monthly price of its 5G Start, 5G Play More, 5G Get More and 5G Do More unlimited mobile plans by $4.
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Verizon later reduced its autopay discount from $10 to $5 monthly for customers on older phone plans in October.
Amid recent price hikes, Verizon reported a boost in profits in its third-quarter earnings report for 2024. Verizon earned $19.8 billion in revenue from its wireless service during the third quarter, an almost 3% year-over-year increase.
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