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FCC Shakes Down Verizon for $7.4M

9/9/14
 
By Ken Magill
 
It’s impossible to know what motivates bureaucrats at the Federal Communications Commission.
 
But judging by a settlement it announced last week, protecting and advancing U.S. citizens’ interests is not it.
 
The FCC has reached a settlement—settlement in this case being a euphemism for shakedown—with Verizon in which the broadband and telecommunications company agreed to pay $7.4 million.
 
The issue: Verizon apparently neglected to give some new customers the ability to opt out of marketing campaigns pitching them on other Verizon services before sending the campaigns.
 
According to the FCC, Verizon is required to give new customers notice that they can opt out of Verizon’s marketing campaigns. 
 
In accordance with this requirement, Verizon’s policy is to include the notifications in new customers’ first bill or in a welcome letter, and to notify existing customers at least every two years thereafter.
 
Beginning as early as 2006, Verizon reportedly failed to notify approximately 2 million new customers of their ability to opt out of Verizon marketing campaigns in their initial bills due to some sort of glitch.
 
However, according to the settlement, the customers who didn’t get the notices in their initial bills did get the two-year notices.
 
So Verizon must have been hiding, right?
 
Wrong. 
 
According to the settlement, Verizon notified the FCC of the problem on January 18, 2013.
 
Oh, so they were dragging their heels in notifying the FCC.
 
No.
 
According to the FCC, Verizon personnel discovered the problem in late 2012.
 
Well then they must have refused to address the issue, or at least failed to address it quickly or thoroughly enough.
 
Read the following excerpt and judge for yourself:
 
“Verizon represents that it took remediation efforts following the discovery of the problem,” the settlement said. “Specifically, Verizon represents that, by March 15, 2013, it sent additional CPNI [customer proprietary network information] opt-out notices to all residential and small and medium business wireline voice customers billed out of the affected systems. Additionally, Verizon states that it banned all marketing campaigns to potentially affected customers. According to Verizon, it lifted the ban only after it performed extensive testing on the system. Verizon further represents that it took corrective action on the bill formatting systems, including expanding the criteria for identifying first invoices. Additionally, the Company states that it has implemented a new program to place the CPNI opt-out notice on every invoice each month for all consumer and small and medium business customers.” 
And for all that, Verizon gets to fork over $7.4 million.
 
Granted, with revenue of $31.5 billion for the second quarter of 2014 alone, Verizon probably spends the equivalent of its FCC settlement on urinal cakes every year.
 
But it’s not the amount or Verizon’s ability to pay.
 
It’s the principle. At worst, due to a programming glitch or two, some business owners may have received some telemarketing calls, some direct mail or—gasp!—some targeted ads online they were unaware they could have opted out of.
 
The horror.
 
Most galling is who foots the bill for the FCC’s bureaucratic grandstanding: Verizon’s customers and U.S. taxpayers.
 
The FCC spent taxpayer dollars conducting an almost two-year investigation that could have been settled with a few phone calls. 
 
But, of course, pragmatism and common sense have no place in government oversight of marketing practices.
 
Bureaucrats aren’t rewarded for what they don’t do. They don’t get promoted for prudence.
 
As a result, a bunch of FCC lawyers just got new resume fodder for an expensive action that did nothing in the public interest that wasn’t already being done.
 
Of course, privacy zealots are calling the settlement a big win in their ongoing battle to protect consumers from seeing advertising that might actually address their wants and needs, and create a little much-needed economic activity.
 
But in their ongoing assault on marketing and advertising, privacy zealots aren’t working to protect or advance consumers’ interests either. Their actions are an ongoing attack on capitalism, nothing more, nothing less.
 
So it should come as no surprise that they would view a grandstanding government shakedown of a company that will pass the costs of that shakedown—even if imperceptibly—onto its customers as a positive development.
 
Can you say “warped?”
 
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