An Inconvenient Fee

Posted by · December 29, 2011 1:07 pm

Is your monthly cell phone bill too low? Do you find yourself frustrated not being able to send more money to your wireless carrier, leaving you with the burden of spending that extra money elsewhere? Well, Verizon Wireless has heard your frustration and finally decided Thursday to do something about it.

In an effort to herd more subscribers toward automatic bill pay (AutoPay), Verizon is introducing a $2 “convenience fee” to monthly service bills. Starting on January 15th, Verizon Wireless customers who pay over the phone or online with a credit card will be charged a couple extra dollars for their convenience—the convenience of Verizon, that is.

“The fee will help allow us to continue to support these single bill payment options in these channels and is designed to address costs incurred by us for only these customers who choose to make single bill payments in alternate payment channels,” the Verizon statement reasoned.

However, the wireless company did provide a list of exceptions that would allow subscribers to avoid the fee. They include (per the Verizon statement):

  • Electronic check online (My Verizon Online, My Verizon Mobile/Handset)
  • Electronic check via telephone
  • Enrollment in AutoPay using credit/debit/ATM card or electronic check
  • Online from the customer’s home-banking service provider website
  • Credit/debit/ATM card, electronic check or cash at a Bill Payment Kiosk, Panel or with a representative at a Verizon Wireless Communications Store
  • Use of a Verizon Wireless Gift Card or Verizon Wireless device Rebate Card to apy a bill in-store, online or by telephone
  • Paper check or money order mailed to the VZW remit address on customer’s bill

Verizon is following suit with a number of other companies who have sought to move customers away from single bill payments and into some form of automatic, electronic payment. However, AT&T—Verizon’s main competitor—has chosen instead to incentivize switching to AutoPay by offering a $10 gift card to those who elect to do so.

For those who don’t have the necessary infrastructure to set up such a payment or prefer to maintain the power to pay their bills as they come in—those on a strict budget who actually read their statements, for example—this fee is anything but convenient. In fact, it comes across as bullying.

While billing mistakes may be rare, Verizon and other companies that bill based on usage are by no means perfect. That is, by enrolling in AutoPay, consumers are forced to relinquish yet another critical safety valve that allows consumers to hold businesses accountable. As if requiring a 2-year commitment wasn’t enough of a prerequisite burden for subscribers to bear. Although there is no problem with the “carrot” approach of exchanging incentives for greater commitments, the use of penalties (“sticks”) to force consumers to further relinquish their active role in the marketplace warrants some considerable concern.

Clearly, revenue is necessary for any for-profit business to be successful. But when the largest, most successful telecom in the market at present begins engaging in these tactics, the idea that Verizon is simply trying to cover unmanageable costs is not compelling.

Responding to the announcement, some sources have suggested switching providers. However, the unfortunate reality is that, unless Verizon customers have the available funds to pay an exorbitant early cancellation fee, such a choice simply doesn’t exist for the consumer who wishes to take his or her business elsewhere.

Hence the legitimate outrage over Verizon’s new “convenience fee.” Though the cost in this particular case is arguably inconsequential, the fact that a company has the ability to levy new fees against already-handcuffed customers in order to force them to surrender even more control is no trivial matter.

  • Brian

    However, the unfortunate reality is that, unless Verizon customers have the available funds to pay an exorbitant early cancellation fee, such a choice simply doesn’t exist for the consumer who wishes to take his or her business elsewhere.

    That’s not necessarily true. Verizon offered (and advertised) online payment as an option, sans fee, when the average person in a contract signed up for service. Verizon’s addition of this new fee is a material unfavorable change to the terms of the contract and should allow individuals to get out of their contract without having to pay an ETF.

    Even if Verizon disagrees, I’m sure a small claims court would see it the customer’s way. This is a switch in terms of service after a contract was signed — which typically invalidates the contract (and “termination fees” associated with it).

  • Well said, Brian. I hadn’t considered that alternative. It will be interesting to see if anyone utilizes the courts after the new fee takes effect.

  • Dennis E. Pillow

    I have been a loyal Verizon customer for many years. This cost increase is going to bring my business relationship to an end. I hope someone at Verizon is made aware of these comments.

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  • Peter

    Although I think it was a stupid PR move and evidence of being out-of-touch with the economic circumstances of many Americans, I think that the fact that Verizon reversed its decision 24 hours later is a testament to the relationship that consumers have with business in a free market economy. Verizon heard the wrath of the their customers and changed their tune. On the surface it may be tempting to blame “evil corporations,” but to be suckered into such petty propaganda as evidenced by what is being peddled right now in the American political arena at present is a cautionary tale of what is truly evil in a free and market-driven country.

    Another recent example was the reversal of new ATM charges by top American banks, initiated by Bank of America, due to their customers unleashing their ire upon hearing the news. What wasn’t reported in the media was that the new charges were a result of new regulatory laws put in place by congress (Dodd-Frank) which forced the banks to recoup lost revenues. One can argue the necessity of these regulations until blue in the face, but the point is that the banks reversed their decisions due to the native friction that exists between two parties who enter voluntarily into an agreement, as did Verizon and BofA customers with their service providers.

    Another example would be the recent Netflix debacle. While Neflix didn’t reverse its pricing decision, it has suffered considerable damage to revenues and its stock valuation in its losing PR battle. This symptom of natural selection should eventually pay off for consumers one way or another. Contrast that with other government-industrial failings (Solyndra) that get propped up by tax payer dollars regardless of the presence of of a viable revenue stream and one should wonder who is really getting cheated by who.

    In a time when Government dictates what kind of light bulbs we can use in our homes, I find these tales a refreshing reminder of the liberties that we often take for granted when balking at unexamined headlines.