‘Bait-and-Switch’: Class Action Alleges Verizon Sneaks ‘Administrative Charges’ into Flat-Rate Cell Phone Plans

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A proposed class action alleges Verizon has engaged in a bait-and-switch scheme whereby it has advertised flat monthly rates only to turn around and pad California wireless customers’ bills with undisclosed “administrative charges.” 

The 47-page lawsuit alleges that Verizon’s administrative charge is simply a means for the company to charge more per month for wireless services without having to advertise higher prices. Per the complaint, Verizon began sneaking administrative charges into customers’ bills in 2005, and the cost of the allegedly undisclosed fee now sits at $1.95 per month for each phone line, nearly a five-fold increase from its initial amount, the suit says. 

According to the lawsuit, Verizon has profited enormously by adding administrative charges to wireless customers’ monthly bills. The case says Verizon does not disclose the administrative charge in the advertising for its post-paid wireless service plans, which are touted instead as costing a particular flat monthly price. 

“Verizon has used the Administrative Charge as a revenue lever to covertly jack up its monthly service prices and to squeeze its existing subscribers for more cash whenever Verizon desires,” the suit alleges. “To date, Verizon has improperly collected over $1 billion in additional charges from its California subscribers through its Administrative Charge scheme.” 

To further its apparent bait-and-switch scheme, Verizon, according to the suit, deliberately and affirmatively misrepresents the administrative charge on customers’ monthly billing statements. Per the case, Verizon excludes the charge from the “Monthly Charges” section of customers’ bills, and instead inserts the fee in the “Surcharges” section, where it’s “lump[ed] together with other costs.” 

Worse, the lawsuit says, Verizon explicitly and falsely states on monthly bills that the administrative charge is a surcharge imposed on subscribers to cover the costs Verizon claims to be billed by federal, state or local governments. 

“Thus, by Verizon’s own design, the monthly billing statements serve to further Verizon’s scheme and keep customers from realizing they are being overcharged,” the complaint alleges. 

On the support page on its website, Verizon defines the administrative charge as tied to its various operating costs, including telephone company interconnect charges and network facility and service fees, the case says. The suit argues that a reasonable consumer would expect these basic costs to be included in the advertised price for a wireless service plan. 

The lawsuit alleges, however, that the administrative charges are, in truth, not tied to Verizon’s interconnect and network facility costs, and the company does not adjust its admin fees based on changes to its own operating expenses. Instead, Verizon sets and increases administrative charges “based on its internal revenue targets,” the case alleges. 

The lawsuit contends that this is evidenced by the fact that Verizon has more than doubled the amount of monthly administrative charges since 2015—from $0.95 to $1.95—despite the fact that operating costs during the same time period have actually significantly decreased. 

“Verizon simply uses the Administrative Charge as a revenue lever to covertly jack up its monthly service prices and increase its revenues whenever it desires,” the complaint says. 

The lawsuit looks to cover all consumers in California who currently subscribe or formerly subscribed to a post-paid wireless service plan from Verizon and were charged what Verizon labeled an “administrative charge” within the applicable statute of limitations period. 

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