From the San Francisco Chronicle, Wednesday, July 12, 2006

by Dave Lazarus

Verizon Contract Still Murky

Millions of Verizon Wireless customers recently received e-mails and bill inserts containing a voluminous -- and optional -- "customer agreement pursuant to lawsuit settlement" but no indication as to what's new in the contract or what the ramifications of accepting it might be.

Confused Verizon customers subsequently bombarded me with dozens of copies of the amended, post-settlement agreement asking if there was anything they need to worry about.

The answer, in short, is no. But Verizon isn't making it easy for people to understand this.

"It's really stupid of them to require customers to read both their old and new contracts to decide which one they want," said Michael Shames, executive director of the Utility Consumers' Action Network, a San Diego advocacy group. "Nobody's going to do that."

Heidi Flato, a Verizon spokeswoman, responded that the company is only doing as it was instructed by a San Diego judge.

"If it's confusing, this is what we were ordered to do by the court," she said. "This is how we were told to do it."

The new contract is part of a 2004 settlement reached in a class-action lawsuit -- known as the Campbell case -- involving as many as 43 million current and former customers of Verizon and a slew of wireless companies it has acquired over the years.

The lawsuit centered on disclosure (or lack thereof) of a variety of fees and charges that resulted in customers' bills going up.

"It's a significant settlement," said Mark Knutson, a San Diego lawyer who helped represent Verizon customers in the case. "The company now has to disclose things to consumers in a clear, up- front way. This allows consumers to compare Verizon's terms with those of other cell phone providers."

Some reports placed the value of the settlement at as much as $1 billion if various coupons offered as part of the deal end up being redeemed. Knutson said the actual value will be much lower, but he declined to estimate a figure.

In any case, the crux of the revised contract is that it contains new language that more clearly discloses fees and charges, such as termination fees, and details things like the service possibly not functioning in all geographic areas.

It also eliminates some previous charges that consumer advocates found to be unfair.

Shames at the Utility Consumers' Action Network said his group played a key role in drafting the revised contract, focusing primarily on making the terms easier to understand.

"There were a lot of important terms that were written in complex legalese," he said. "We translated them into plain English."

Shames said he also persuaded Verizon to drop some charges that were particularly onerous for customers, such as a fee being levied if an unanswered call rings for more than a minute.

At first, though, the settlement didn't include clearer contract language. It basically involved goodies from Verizon's toy chest.

For example, customers were offered their choice of a bill credit of between $15 and $30 (depending on your current contract terms), $15 off the purchase of Verizon merchandise, a 120-minute long-distance calling card or 1,500 text messages over a six-month period.

Oh, and you'd get a coupon for a free earbud to use with your cell phone. Those things are still part of the settlement.

But when Shames and others at the Utility Consumers' Action Network saw what was afoot, they filed an objection with the court handling the case.

"All they were doing was having people shop at the company store," he said of Verizon's settlement offer. "That's when we stepped in."

Judge William Pate saw merit in Shames' objection and authorized him to draft a revised customer agreement that would address the original question of whether Verizon was adequately disclosing its business practices.

The contract now being sent to customers represents Shames' best effort to clear things up.

"It's still complicated," he acknowledged. "It was impossible to understand the original contract. The new one is at least a little clearer."

The new contract is being released now only because appeals and other legal maneuvering in the case have finally concluded.

Verizon's Flato acknowledged that the burden is on customers to figure out whether they want to accept the new contract or stick with their existing agreements.

She also admitted that finding the revised language can be tough. Portions of the new customer agreement, for example, are in capital letters, but these aren't the new parts. They're just in capital letters.

"This is difficult," Flato muttered as she scrolled through the document in search of what she said were 12 separate disclosures that are new.

Well, not exactly new. It turns out that Verizon, in anticipation of the lawsuit settlement, implemented many of these changes in November 2003. Most current contracts already contain language similar to what's now in the revised agreement.

"The vast majority of our customer base of 53 million is already under contracts that contain these disclosures," Flato said.

Bottom line: Verizon's amended contract is nothing to worry about. It's certainly no worse than those of other leading cell-phone companies.

But it shouldn't be so hard for consumers to figure this out.