How the Verizon Credit Card Fee Saga Unfolded

Jan 24

How the Verizon Credit Card Fee Saga Unfolded

For a lot of Americans, the week between Christmas and New Year’s is a time of relaxation and inactivity. Many adults do not have to work, and kids are out of school. In short, nothing too exciting tends to occur during the final week of the year.

That was certainly not the case in 2011 for Verizon Wireless, who announced a new convenience charge for its customers — and then rescinded the fee almost immediately after an unexpected backlash. What’s more, this ordeal represented a monumental event in the constant battle between corporations and consumers.

Let’s take a closer look at how this saga unfolded:

On the morning of December 29th, an internal memo was leaked on the Internet which detailed how Verizon Wireless was going to begin charging its customers $2 each time they paid their bill using their credit cards — either online or over the phone.

Later that day, Verizon officially announced the implementation of the “convenience fee,” saying only that it was trying to recoup costs associated with those “one-time” payment channels. Customers could avoid paying the fee by enrolling in the company’s AutoPay program, writing a check for their bill amount, or paying at a Verizon store.

The new fee (which was set to begin on January 15, 2012) was met with bewilderment by some industry watchers. While the idea of charging convenience fees for phone payments wasn’t new (because companies often pay a third-party provider to process those payments), the notion of levying the $2 fee for Internet payments was unusual; considering that almost all e-commerce and service providers allow consumers to pay over the Web for free. The timing of the announcement — during the last week of the year, when many people may not notice — was also met with suspicion.

Verizon customers weren’t just bewildered; they were angry. And they voiced their displeasure loudly and immediately. Twitter and Facebook lit up with protests and calls for service provider changes. An online “STOP Verizon” petition began circulating in cyberspace. Customers even vowed to use more paper in an effort to cost Verizon more money than the fee would recoup.

There were other reactions to Verizon’s announcement later that day. The Federal Communications Commission issued a statement that it would be looking into Verizon’s new fee. And PrepaYd Wireless released a new customer plan in response to the proposed charge by Verizon which offered free debit or credit card payment options and other perks.

Then, on December 30th, Verizon caved to the pressure. It announced that it was rescinding the proposed $2 convenience fee “in response to customer feedback about the plan.”

As the dust settles from this debacle, here are a few other observations:

It took about a month for Bank of America to bow to pressure and take back its proposed $5 monthly fee on debit card accounts earlier in 2011. The Verizon about-face occurred after only a single day.
It appears that one of Verizon’s main reasons for the fee was an attempt to nudge customers into its AutoPay program. This would benefit Verizon because it would allow Verizon to get its money sooner so it could pay off its vendors more quickly.
Had Verizon taken a different approach — say, test marketing the fee or asking customers for feedback via social media instead of springing it on customers during the week after Christmas — the company might have been able to convince the public of the necessity of the change. At the very least, Verizon would have avoided the ensuing PR fiasco.
Verizon apparently doesn’t learn from its mistakes. In 2010, the provider instituted a $3.50 surcharge for FIOS TV or Internet customers who paid their bills by credit card each month without AutoPay. That fee was rescinded after consumer complaints.

So if you are just now hearing about the drama surrounding Verizon Wireless’ $2 convenience fee, don’t feel too bad. The whole episode played itself out in one day — so if you blinked, you probably missed it.

Image: toptechreviews.net

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