CPUC Forces Verizon to Unlock Phones and Refund Customers

The California Public Utilities Commission scolded Verizon Wireless in an order Thursday for its handling of a case of alleged customer fraud. The CPUC granted relief to a family of complainants through a 4-0 vote on a consent agenda during a Thursday meeting. Verizon could face further sanctions, the agency said. “During the course of this proceeding, Verizon failed to disclose material information concerning the porting and reassignment of at least one of Complainants’ mobile phone numbers,” said the draft decision in docket C.23-12-005. “This proceeding will remain open in order to explore an Order to Show Cause against Verizon for this material omission.” The complainants alleged that, without notice, Verizon terminated service to and locked their five iPhones and associated phone numbers for reasons of fraud. The customers said that, as a result, they had to buy five phones and suffered irreparable injury to their businesses because they couldn’t port their locked numbers to another carrier. Verizon asked to dismiss for lack of jurisdiction because its agreement with customers requires arbitration. However, the CPUC said the arbitration clause doesn’t circumvent the commission’s authority. Also, the carrier argued that it may terminate customers’ phone services without notice under its agreement and in exigent circumstances. Verizon argued that it acted after determining that the customers committed fraud. The CPUC agreed that the carrier could terminate customers’ service, but was “not satisfied with the way Verizon's Fraud Department handled this case and the allegations against the Complainants.” Accordingly, the CPUC required that Verizon confidentially “submit a comprehensive report of the procedures and criteria used … to identify and accuse customers of fraud,” with “specific evidence that supported Verizon's claim that the Complainants in this case engaged in fraudulent activity.” Also, the CPUC said the customer agreement “does not authorize Verizon to lock a phone or lock a number associated with a mobile phone.” So, the agency required Verizon to unlock five iPhones and their associated numbers. In addition, the CPUC required the carrier to refund the customers the costs of three of the five locked phones, plus the five replacement phones they bought after their service was terminated. Verizon declined to comment.