
Verizon's audacious new fee for on-line payments - raymondh
http://money.cnn.com/2011/12/29/technology/verizon_convenience_fee
======
uptown
So somebody, somewhere in the company figured out that they could save/make $X
billon by charging a $2 "convenience fee" or getting their customers to switch
over to ACH transactions thus saving 2% - 3% they're losing to credit card
companies ... and since customers are frequently locked in by contracts ... or
with hardware that won't work on other networks ... or don't even know what a
routing number is ... they're captive.

Class action lawsuit ... lawyers get paid ... customers maybe get a coupon for
something useless in a year or two, or maybe nothing at all ... and the world
keeps spinning.

Maximize shareholder value! Beat those quarterly estimates! Make your customer
relationship more difficult! Can you hear me now?

~~~
danilocampos
Thanks for writing my catharsis for me. Fucking exactly.

I can't wait until we're past this moronic "maximize short-term pennies along
with long-term loathing!" mindset.

One of the first things taught about negotiating is, unless you're about to
leave the planet never to return, don't make one-sided deals. Eventually they
catch up with you, if only because no one wants to work with you anymore. It's
such a valuable lesson. When will corporate America realize there's more money
in the long game?

~~~
ajross
It's cynical, but one has to at least consider that the reason is because
there _isn't_ more money in the long game. Over time all markets become
commoditized, which is sort of a "one sided contract" in the consumers favor.
This kind of cheating can be seen as attempt by the service providers to fight
that trend.

~~~
aaronbrethorst
Oh, there's still money in it. Just not at the margins that Verizon has grown
accustomed to. And I think this sort of commodification is still a long way
out. The capital necessary to build the nation's largest wireless network is
only available to a handful of companies.

------
josnyder
Much as I like to jump on VZW, I don't think that Verizon should be vilified
for this one. By my back-of-the-envelope math, Verizon is passing on the cost
of credit-card processing to their customers, and no more (2% CC processing
fee on a $100 phone bill == $2).

I would much prefer to see customers realize how much they are gouged by
credit card companies every day. Some small businesses (e.g. gas stations, the
deli on the corner) already do this, and I'd like to see other large
businesses follow suit. It's time for people to realize the sorry state of
payments at-present, perhaps opening the way for a better alternative. Some
are saying that Verizon is abusing their captive customers, but I see this as
Verizon trying to escape captivity as a customer of Visa, MC, and Amex.

~~~
thaumaturgy
Humbug! CC fees, while annoying, are a cost of business which should already
be included in the math they use to determine what I'm paying them each month.

If they had to mail out a paper envelope & invoice and then pay somebody to
handle my check back to them, do you think that would cost them more or less
than $2 each month? I'm thinking it would be pretty darn close to $2 to deal
with that.

Should they be adding fees to my bill every time I visit their website, so
that they can cover those costs too? Should they be charging me every time I
contact a customer support representative?

This is as indefensible as Bank of America's ATM fee.

I've been a 5-line Verizon customer for at least 4 years, I've been out of
contract for at least a year, and I'm calling them in the morning to express
my extreme displeasure at this. If they don't reverse course on this I'm
switching to Republic Wireless.

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Deezul
"The fee will help allow us to continue to support these single bill payment
options ... and is designed to address costs incurred by us for only those
customers who choose to make single bill payments,"

Isn't running a for-profit company supposed to address costs associated with
taking customers money? Convenience charge could simply be translated to a
"because we can charge".

~~~
tsieling
Not quite. A convenience charge is a naked, unbridled contempt charge.

They do because they can, and nobody will stand up for you. Nationalize.
Banish the execs to Monster Island. Start over.

~~~
JoshTriplett
> They do because they can, and nobody will stand up for you. Nationalize.
> Banish the execs to Monster Island. Start over.

Right, because having _one_ company works so much better than having several,
and because governments do _so_ much better at listening to their "customers",
and because you can always stop paying if you don't like the service. Oh,
wait, none of those things.

------
dbjacobs
If they were charging for ACH payments I could understand the outrage. But
passing through some of the credit card fees they pay hardly seems to be a
capital offense. The only reason you don't see lots of companies passing
through the cost is that their agreement with VISA et al forbids passing
through the cost (which is why this is characterized as a convenience fee and
is not exactly equal to the credit card fees they pay).

Simply put, there are more important things to complain about than this.

~~~
ericabiz
The problem is, they don't charge for _recurring_ credit card payments. Only
_one-time_. And as someone who's signed a lot of merchant account agreements,
there aren't different charges from Visa/MC/Amex for _recurring_ payments vs.
one-time. The fees are the same--this is just a ripoff from Verizon.

~~~
natrius
Customers who have recurring payments set up are undoubtedly cheaper to
service than one-time payers. They're less likely to fall behind on their
bills, and getting customers to pay up after the fact costs money. This sounds
like a reasonable charge to incentivize recurring payments.

~~~
tzs
A recurring payment, though, is more likely to fail. For instance, if a card
is at the limit, a recurring payment simply fails, and then you've got to find
some way to notify the customer that they need to address the issue.

Someone coming to your site to pay his bill, on the other hand, gets notified
right away if there is a problem and so can get right on addressing it.

Also, when people get new cards they often forget to update places that have
the card on file, leading to much hassle for the vendor.

Another advantage of customers who are paying month-by-month at your site--you
have up sell opportunities that you don't have with customers who are on
recurring billing.

For a service that the customer considers to be reasonably high priority, I
suspect that the combination of less billing attempt failures and the extra
money from up sell attempts make the month-by-month manual customers actually
cost less to deal with then the recurring customers.

------
fragsworth
One thing customers should be aware of: when carriers change the terms of your
contract, you are normally free to cancel your service without paying an early
termination fee. For many people, this can amount essentially to a massive
discount on your phone.

~~~
nhangen
I want to see more research on this topic. If this is true, I'm happy to do
it. I pay every month online via credit card, which was a PitA as it
was...this is flat out silly.

~~~
snprbob86
There is a great deal of case-law governing material changes to contracts, in
particular: materially ADVERSE changes. Despite what may be in your ISP
contract, case law takes precedence. Many changes to pricing, service, etc.
offer you the opportunity to refuse the new terms without being penalized by
existing terms such as the termination fee. [insert standard IANAL disclaimer
here]

You just need to know a few tricks of the customer service phone center game.
Do these steps in order, stop whenever you get your way. Note that _you must
be willing to go all the way_.

0) Make sure that the company only has a single payment mechanism on file for
your account: a credit card

1) Call the company

2) Slam zero, pound, star, shout "AGENT" a bunch, and throw in a few swear
words to trigger the system to send you to a live person ASAP

3) Ask to speak to someone in account management; preferably a retention
specialist

4) Mention the materially adverse contract change

5) Tell them you'd like the change not to apply to you

6) Threaten to terminate your account, unless they provide an agreeable
alternative offer

7) Refuse termination fees on grounds of materially adverse contract changes

8) Assure he operator that you will issue a chargeback for any such
termination fees

9) Authorize cancelation of service

You should also keep a timestamped log of every person you speak to. This
includes both their informal name and some kind of unique identifier, such as
a phone extension number. Your log should include every material claims/fact
you provided them and they provided you, especially specific numbers and
identifiers, such as prices/rates, case numbers, and descriptions of
processes.

Follow up: After you get your way. _Call them right back_!! Get someone else
on the line and ask them to read to you your case notes. Call operators will
lie to you to get you off the phone. Your case isn't resolved into someone
totally different reads the case log back to you as you expect it to be. When
you call, don't hint to them that you don't trust them. Tell them you got
disconnected & ask them to read back the log aloud so that you are both on the
same page. You don't want the new operator to be tainted by putting you on
hold to go talk to the old operator.

~~~
nhangen
Thanks for that. Looks like I'll have to wait to use it - they've rescinded
the fee.

------
bmelton
I'll never understand this. It costs them less to process my charge online in
terms of manpower, and is at least as cheap if not cheaper on charges incurred
for them upstream.

This is the truest definition of 'convenience charge' though, as they are, in
fact, charging you for convenience. As a Verizon customer who has been
considering dropping their cable service for some time (due to Hulu, Netflix,
Amazon, etc.), I'm now giving thought to dropping them as an internet provider
as well since we have a lot of good options in Maryland. I do love their
internet service, but I hate bullshit charges that don't at least make sense.

~~~
stanleydrew
I'm interested in the good internet options in Maryland that you speak of. My
mom lives in Montgomery County and is looking to switch from RCN.

~~~
heynk
Also had Comcast in MoCo, definitely solid internet, overall pretty pleased.

~~~
crgt
Comcast is great if you want to give your money to a SOPA supporter.

------
jarek
Thinking of the differences between the situation in the U.S. and
western/central Europe (which I'm somewhat familiar with):

Cellular, and anything else to do with physical infrastructure, might be the
few cases in technology where the size of U.S. market works against creating
value for the consumer. In most everything else, having access to a common
market of ~300 million people is awesome; it's not so awesome when you have to
be able to service a substantial amount of them to get critical mass.

Wondering: in Canada, we have upstart cellular operators competing by offering
lower prices for service covering only the largest urban areas of the country.
So if you're in Toronto, Vancouver, and Calgary (and a couple of other
places), you have more choice, in Flin Flon not so much. Anything like that in
the U.S.?

~~~
rdl
I really wouldn't hold up the Canadian mobile industry as better than the US.
It's one of the few markets actually worse than the US (data, call charges,
etc.).

The US has regional or urban carriers; often they're MVNO, or have some local
infrastructure and use another big carrier for other areas.

They're mainly confined to the low end/poor/no credit market. Until recently,
they barely had featurephones. Probably the big ones are Virgin Mobile, Boost
Mobile, and MetroPCS.

~~~
jarek
> I really wouldn't hold up the Canadian mobile industry as better than the
> US. It's one of the few markets actually worse than the US (data, call
> charges, etc.).

That's what I keep on hearing. But I also keep on hearing about $60, $100
smartphone bills in the U.S., and the last time I paid that much was on a
shitty contract with Rogers in 2010. When I signed that contract in early
2009, there were no better options - I had to sign up for a year if I wanted
Blackberry push email, and it didn't matter that I had my own phone (carrier
subsidy $0).

Now I pay $29 for unlimited local voice, unlimited text, unlimited-with-an-
asterisk data, contract-free. My starting costs were a used $200 Nexus One and
a $25 SIM card (much too much, but whatever). My carrier right now has a
promotion with unlimited Canada/U.S. voice for $40 and unlimited text/data.
The catch is that I would pay extra for service in the boonies, but I don't
need service in the boonies. At the very least, I have the choice; does your
average Android owner in the Bay Area or in Seattle, if so, what are the
choices?

------
jbri
I was under the impression that credit card providers basically say "you can't
charge extra for paying by credit card".

What would happen if Visa or Mastercard said "you're in violation of our
terms, we're cancelling your merchant account"?

~~~
dangrossman
I believe those terms got banned in one of the financial reform bills of the
past two years. They're not allowed to prohibit discounts for other payment
forms anymore.

Perhaps it's this one:

> (a) With respect to credit card which may be used for extensions of credit
> in sales transactions in which the seller is a person other than the card
> issuer, the card issuer may not, by contract or otherwise, prohibit any such
> seller from offering a discount to a cardholder to induce the cardholder to
> pay by cash, check, or similar means rather than use a credit card.

[http://www.fdic.gov/regulations/laws/rules/6500-500.html#fdi...](http://www.fdic.gov/regulations/laws/rules/6500-500.html#fdic6500167)

~~~
jbri
Looking at Visa's current terms, they don't seem to run afoul of those
regulations - but Verizon is still violating them. Visa says you're allowed to
offer a discount to non-credit-card payments, but it _has_ to be presented to
the customer as a discount for cash/gift card/e-check/whatever payment, rather
than as a surcharge for paying with your credit card.

~~~
frankydp
If that is the case then this change would have to be a 2 dollar increase to
all bills and then removed if you pay not using a CC. In which case this would
be a material change to the contract.

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lukeschlather
We're going to need to break up the telecoms again. AT&T and Verizon are too
big to offer halfway decent service.

------
enigmabomb
This seems like the kind of problem the open market should solve.
Unfortunately, competing with Verizon isn't about the $2 convenience fee, it's
about the nationwide 4g network.

Every company has a right to make a profit, however they will have to provide
value for it. This is a value reducing proposition. If reddit thinks Godaddy
is evil, I'm excited to see what happens with this.

------
ericabiz
IANAL-Is it possible to set up a class-action lawsuit on this? We, Verizon
customers, entered into a 2-year contract agreement. Now, in the middle of
that contract, they are changing the agreement. At the least, shouldn't they
be forced to wait until a customer signs a new contract to institute new fees?

Perhaps someone with more legal experience can chime in. As a Verizon customer
who just signed a new 2-year agreement, I'd be willing to join the class and
spread the word about it.

~~~
jcampbell1
I assume they will respect any existing contracts. The class action stuff
around fees has generally been because the provider misrepresents the nature
of the fee. For instance, they advertise a $39 a month plan, but then throw in
a pure revenue surcharge with a description that makes it look like a federal
tax.

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jhaglund
Sprint kinda did the same thing. Seems they hid it better tho --
<http://www.sprint.com/spendinglimit> 4th paragraph mentions the charge.
Anyone who didn't sign up for auto-pay is charged an extra $5 a month, even if
you pay on time.

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colkassad
I have Verizon set up in bill-pay through my bank. When I send them a payment
using this method, is this considered a "one time" payment? The article is not
very clear on that. I don't have an automatic recurring payment setup, I send
the payment manually every month via my bank account.

~~~
mgxplyr
No, you don't get charged by using your home baking bill pay system.

~~~
colkassad
Thanks

------
amanuel
Bank of America, NetFlix, GoDaddy and now Verizon.

Companies in 2011 that suffered self inflicted wounds to their brand.

------
milkshakes
time for everyone to start paying by paper check -- let's see how long it
lasts :)

------
jeffdavis
Playing devils advocate: could this be a revolt against the credit card
companies over their fees, rather than an attempt to screw the customer?

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wizard_2
I'll do the same thing I did with godaddy and leave. Verizon was already on my
shit list for tracking every website I visited via my phone.

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danberger
This is a god damn outrage. To what point will corporate america keep pushing
the envelope until consumers revolt?

