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New Verizon Fee A Surprise To DU Professor

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University of Denver Daniels College of Business Prof. Mac Clouse talks with CBS4's Brooke Wagner. (credit: CBS)

University of Denver Daniels College of Business Prof. Mac Clouse talks with CBS4’s Brooke Wagner. (credit: CBS)

Editor’s Note: A day after this story aired on CBS4 Verizon announced it was canceling the plan for the fee described in the story below.

DENVER (CBS4/AP) – A Colorado business expert says he’s surprised Verizon Wireless is moving forward next month with a plan to charge $2 for every payment subscribers make online or by telephone with their credit cards.

Verizon Wireless dropped the plan to start charging after a backlash from customers. In a statement on its website Friday, the company said “customer feedback” prompted the decision to drop the “convenience fee” it wanted to introduce on Jan. 15.

The billing fee would not have applied to electronic check payments or to automatic credit card payments set up through Verizon’s AutoPay system. Paying by credit card in a Verizon store will also be free, as will mailing a check.

The country’s largest cellphone company shared this statement about the billing fee plan with CBS4 Thursday after the announcement was made public:

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

Verizon calls it a payment convenience fee, but University of Denver Daniels College of Business Professor Mac Clouse says those extra credit card fees for Verizon would be minimal.

“Usually electronic transactions are pennies, not dollars. So $2 seems extremely high,” Clouse said.

Several Verizon customers told CBS4 Thursday night they were unhappy with the announcement.

“It’s a little upsetting, definitely,” Luis Martinez said. “That’s just straight up stealing. Why would they charge for something that you’re already paying for service?”

Clouse said there are two recent examples of fee hikes that have been unpopular — with Bank of America and with Netflix.

“The public was pretty well outraged and they had to take the fees away,” Clouse told CBS4.

Verizon Communications Inc., the landline phone company that owns most of Verizon Wireless, tried last year to introduce a $3.50 fee for people who paid their bill for FiOS TV or Internet service month-to-month by credit card. It backed off after complaints.

“Two dollars may not be a lot for some people but if you start adding up to all the people that are paying that $2, how much more money do they want? It’s just more money hungry,” Martinez said.

Other carriers have tried to get subscribers to move to automatic payments through other means. AT&T Inc. offers a $10 gift card for those who set up AutoPay. Sprint Nextel Corp. charges subscribers who have caps on the fees they can rack up each month. Those people are charged $5 monthly unless they set up automatic payments.

It’s not uncommon for utilities, universities and even state tax departments to charge convenience fees for online payments. Each credit-card payment comes with fees that the companies can avoid by getting electronic checks instead. Automatic payments mean less trouble for companies in going after late payments.

Verizon Wireless serves 91 million phones and other devices on accounts that pay the company directly, and more who pay indirectly through other companies.

(TM and © Copyright 2011 CBS Radio Inc. and its relevant subsidiaries. CBS RADIO and EYE Logo TM and Copyright 2011 CBS Broadcasting Inc. Used under license. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)

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