Lawsuit over alleged phantom phone billing settled for 88 million dollars

The four-year-old class-action suit brought by 170,000 customers alleged that the company's unit Verizon California, previously called GTE California, racked up tens of millions of dollars in profits by continuing to charge them for obsolete telephones they no longer possessed.

The customers alleged that a "rental equipment" charge was added on bills for up to 13 years after California's phone industry was deregulated in 1988, at which time customers stopped renting phones and bought their own.

The four- to five-dollar-a-month charge that continued to appear on bills cost some customers as much as 1,000 dollars a month, lawyers for the customers said.

"GTE reaped tens of millions of dollars in profit by failing to properly label its telephone changes," said one of the lawyers for the customers who brought the suit, Marc Coleman.

"Taking advantage of its own customers is shameful," he added.

Verizon California stressed that it had not admitted to any wrongdoing linked to the lawsuit and had quit the phone rental business in 2001.

"Although Verizon California did not engage in any wrongdoing with respect to that program, settling this issue was in the best interest of our customers and our company," the company said in a statement obtained by AFP.

"The court has determined that the settlement was fair and reasonable and we agree," the company said in the brief communique, declining to comment further on the case.

The lawsuit, filed in 2000, was initially dismissed and then reinstated on appeal. A Los Angeles Superior Court judge gave his final approval to the deal on Tuesday.

Under the class-action settlement that was sealed on Tuesday, each of the customers will get about 500 dollars, while lawyers were awarded fees of 1.79 million dollars.

"Our hope is that this sends a message that you cannot defraud, on a massive scale, hundreds of thousands of people and get away with it," said another lawyer for the plaintiffs, Dan Stormer.

"After the deregulation of the phone industry, when people could buy their own phones, Verizon continued to bill people for the next 13 years for phones they didn't even have," he said.