Verizon

SETTLEMENT AGREEMENT

This Settlement Agreement ("Agreement") is made and entered into this 7th day of March 2005, between the Pennsylvania Office of Consumer Advocate ("OCA") and Verizon Pennsylvania Inc. and Verizon North Inc. (collectively "Verizon").

WHEREAS, Verizon bills and collects toll charges for international long distance calls placed by its customers who are presubscribed to its affiliate, Bell Atlantic Communications, Inc., d/b/a Verizon Long Distance ("VLD") for long distance services;

WHEREAS, some Verizon customers who use a dial-up modem to access the Internet have been billed international toll charges by VLD as a result of a practice called modem hijacking, which involves the download of an automatic dialer software program provided by a third party (i.e., not provided by VLD) onto the customer's computer hard drive, typically after a computer user has received a pop-up ad;

WHEREAS, the dialer program can make international calls without the customer's knowledge or express authorization;

WHEREAS, pursuant to prior policies of VLD and VLD's service agreement with its customers, Verizon either did not adjust modem hijacking call charges or rerated them at VLD's International Choice Plan with City Rates international plan rate;

WHEREAS, some Verizon customers who were dissatisfied with Verizon's adjustment practice for VLD international toll charges involving modem hijacking have filed formal or informal complaints with the Pennsylvania Public Utility Commission ("PUC"), the Pennsylvania Office of Attorney General ("OAG"), the Federal Communications Commission ("FCC") or the Federal Trade Commission ("FTC"), and the OCA has intervened in a number of the formal PUC complaints; and

WHEREAS, the OCA and Verizon wish to resolve all pending complaints before the PUC by Verizon customers regarding VLD international toll charges associated with modem hijacking, including the formal PUC complaints in which the OCA has intervened, and to avoid future modem hijacking litigation;

NOW, THEREFORE, the OCA and Verizon hereby agree as follows:
  1. After the date of this Agreement, if a Verizon customer in Pennsylvania lodges a complaint with the PUC, OCA, OAG, FCC, FTC or Verizon about current unauthorized VLD international call charges itemized on his or her current Verizon bill caused by modem hijacking, Verizon, after receiving the complaint from the customer or an agency, will remove 100% of the modem hijacking charges and associated taxes, surcharges and late payment charges from the customer's Verizon bill and recourse the charges to VLD.
  2. Verizon will make no further effort to recover such charges from the customer and will not suspend or threaten to suspend local or toll service as a result of these charges.
  3. Verizon will advise the customer that this recoursing adjustment is a one-time adjustment which will not be made again, subject to the exception that the customer will receive a further adjustment of charges for modem hijacked international calls made before the customer's call to Verizon but which are itemized on a bill subsequent to the call and which are subsequently reported by the customer to Verizon.
  4. Verizon will also advise each customer that VLD may pursue collection of these charges from the customer if VLD has reasonable grounds to believe that the customer consented to use the services that resulted in the charges.
  5. Verizon will promptly stop any Verizon suspension or collection action initiated against the customer as a result of the customer's nonpayment of charges for modem hijacked international calls, and will ensure that any adverse credit report on the customer by Verizon caused by the nonpayment of the modem hijacking charges is corrected. Notwithstanding the foregoing, to the extent permitted by law, Verizon may engage in suspension or collection action for unpaid charges that are unrelated to charges for modem hijacking.
  6. Verizon will provide information to the customer about steps to take to help prevent further modem hijacking charges.
  7. Verizon will also provide information to the customer about available Verizon tariffed international call blocking options and the charges therefor.
  8. Consistent with the terms of the going-forward adjustments described in paragraphs 1 through 7 above, Verizon will provide a 100% charge adjustment or refund, as appropriate, to all present and former Verizon customers in Pennsylvania who, prior to the date of this Agreement, complained (either formally or informally) to the PUC, OCA, OAG, FCC or FTC, and to all present and former Verizon customers in Pennsylvania who, after the date of this Agreement, complain to any of these agencies or to Verizon about prior (i.e., non-current) unauthorized VLD international charges itemized on prior Verizon bills and caused by modem hijacking. Adjustments and refunds will not be required where Verizon does not have, and the customer has not provided to Verizon, bill documentation to verify such charges and/or payments. Verizon acknowledges that in Pennsylvania its representatives handling modem hijacking claims generally will be able to retrieve up to four years of past customer bills. A customer shall not receive more than a 100% adjustment for modem hijacking charges (e.g., if a customer previously received a 100% adjustment because of a complaint to a government agency, that customer may not file another complaint with Verizon and request another adjustment for the same calls). For current Verizon customers, an adjustment will appear as a credit on the customer's Verizon bill. For individuals who are no longer Verizon customers, Verizon will make reasonable efforts to locate such customers and mail them a refund after confirming that they paid the disputed charges.
  9. Verizon will supply the PUC, OCA and OAG with the substance of information, in detail, covered by Verizon, and any Verizon contractors, with modem-hijacked customers to facilitate consistency in counseling provided by PUC, OCA and OAG personnel to modem-hijacked customers.
  10. The OCA will cooperate with Verizon in pursuing the settlement and discontinuance of all outstanding PUC formal complaint litigation involving modem hijacking, including those complaints in which the OCA has intervened.
  11. This Agreement will be filed with the PUC but the parties will not request PUC approval of the Agreement.
  12. The OCA and Verizon, on a mutually agreed upon date, will issue the joint press release attached hereto as Exhibit A announcing this Agreement, including advising eligible customers about how to receive an adjustment of charges and/or refunds, as appropriate, as set forth in paragraphs 1 and 8 above.
  13. The OCA and Verizon will cooperate in working with the FCC, VLD and other third parties to attempt to stop modem hijacking.
  14. The obligations undertaken by Verizon under this Agreement shall not be construed as an admission of liability by Verizon or VLD.
  15. This Agreement represents the entire agreement between the OCA and Verizon with respect to the matters addressed herein.
  16. The OCA will not file a complaint or intervene in any future complaint against Verizon concerning modem hijacking where Verizon has removed and recoursed charges and met all other requirements consistent with this Agreement.
IN WITNESS WHEREOF, the OCA and Verizon by their authorized representatives have hereunto set their hands and seals, intending to be legally bound hereby.

OFFICE OF CONSUMER ADVOCATE
By: ____________________________
Name: __________________________
Position: ________________________

VERIZON PENNSYLVANIA INC.
By: __________________________
Name: _______________________
Position: ______________________

VERIZON NORTH INC.
By: __________________________
Name: _______________________
Position: ______________________