New Jersey sues Verizon

The Record - Hackensack, New Jersey  |  March 19, 2009

Kevin G. DeMarrais

Mar. 19, 2009 (McClatchy-Tribune Regional News delivered by Newstex) -- NEWARK -- The New Jersey Division of Consumer Affairs has sued Verizon (NYSE:VZC) (NYSE:VZ) for allegedly using "deceptive and misleading" marketing practices for its FiOS television, telephone and Internet services.

In its four-count complaint, filed in Superior Court in Newark, the state alleges the telecommunications giant violated the state's Consumer Fraud Act through "misrepresentations and knowing omissions of material facts" in its sales and marketing of the fiber-optic service.

The lawsuit was announced Wednesday by Attorney General Anne Milgram and David Szuchman, director of Consumer Affairs.

"This is a classic case of bait and switch," Milgram said.

Some customers complained of long waits or not being able to get the 19-inch digital television sets promised to new subscribers, Milgram said. Others got hit with higher-than-expected bills, and then had great difficulty getting the problems corrected, Milgram said.

"FiOS is touted for its clearer picture, but Verizon obscured the truth from potential customers in its advertising and sales pitches," Milgram said.

"Deception and misrepresentations have no place in the marketplace and we will hold businesses accountable when they violate the public's trust."

In a statement, Dennis Bone, president of Verizon New Jersey, said the issues raised by the attorney general "are related primarily to the start-up of the FiOS business nearly two years ago in New Jersey and have been largely addressed."

He said the company will continue to work with the attorney general "to resolve any remaining concerns and to ensure that our customers are fully satisfied."

The attorney general also hinted that Consumer Affairs is looking into similar activities by the state's cable companies that have gone head to head in promoting similar triple-play packages, combining high-speed Internet, digital television and telephone services for monthly rates under $100.

Carol Smith of Clifton was among the customers who said they had problems with Verizon. She had to wait months for the television "because instructions were confusing about how to redeem it," and "the many mysterious fees and taxes" added up to an additional $20 per month," Smith said.

When she canceled and switched to Cablevision's (NYSE:CVC) Optimum package, Smith returned the Verizon equipment in person to a Paramus location, she said, but a short time later got a notice saying it had not been returned. She was forced to pay a fee, which was not credited to her account.

"They put me into collection," she said. "I sent them the canceled checks, but whoever I would call, I would get no satisfaction."

Rich Young, a Verizon spokesman, said the problem with the free televisions was that the company was overwhelmed by consumer response.

"We gave away over 40,000 televisions in New Jersey, hundreds of thousands nationally," Young said. "There were some delays, but I'm not aware of any individual who is still owed a TV."

Smith did not file a formal complaint with Consumer Affairs, but 266 other state residents did complain -- about marketing, sales, billing and customer service -- leading to an investigation and the civil charges filed Monday.

Some complaints concerned promises made by door-to-door sales people, including waiving of installation and activation fees for which the customers were later billed, Milgram said. Even when the sales are made by independent contractors, Verizon is responsible for what they do, she said.

Each violation of the state's Consumer Fraud Act carries a civil penalty of up to $10,000 and up to $20,000 for each subsequent violation. Theoretically, the potential penalty could be in the millions of dollars, although that would be rare in this type of case.

E-mail: demarrais@northjersey.com

Newstex ID: KRTB-0086-33207216