How To Argue Against Paying The Federal Universal Service Charge
Posted on by Jon Colgan
Surcharges are big business for cell phone carriers. If every US wireless subscriber pays five dollars in total surcharges monthly, then carriers get to slip an additional $1.7 billion in their pockets—every month!
340 million US wireless subscribers X $5/month = $1.7 billion/month.
Now the shocking part: most of us pay more than $5/month. So we’re talking about a systematic ruse that bilks US consumers out something north of $25 billion/year. Carriers have a $25 billion incentive to keep this golden goose alive, but to do this, they have to lie to consumers.
One CellBreaker customer wrote to Verizon to object to a sudden 46% price increase in something called the Fed Universal Service Charge. How Verizon responded is truly a work of art–as con artistry goes. Here’s Verizon’s response from Julius Morris:
Good Afternoon [Customer],
We appreciate your concern regarding the change in billing on account [number] for billing statement [date]. Please see information below regarding the Federal Universal Service Charge:
The Federal Universal Service Charge is not a charge set or regulated by Verizon Wireless. It supports a fund created by the Federal Government to promote universally affordable telecommunications to all American consumers, including low-income consumers, all eligible schools and libraries and rural health care providers. This charge, including the fact that it varies quarterly based on a rate set by the Federal Communications Commission, as described in the Plan brochure when you established service with us. It is also described on each of the bills we send to you, located on page 2. The FUSC cannot be waived without a valid exemption. No accounts are categorically excluded from being charged the FUSC. An account can only be excluded by contract or if an exemption certificate is on file. We do not waive the early termination fee because the charge was part of the terms you accepted at the time of your contractual agreement.
The ETF charge of [amount] is deemed valid considering information above.
I will be contacting you via telephone to address any other concerns.
Supervisor, BGCO | Verizon Enterprise Solutions
1110 Sanctuary Pkwy, Alpharetta, GA 30009, USA
Now consider the context of this exchange. Months ago, the customer opened his monthly bill and noticed that Verizon had suddenly increased his price by 46%. He consulted the customer agreement and found the section entitled “Can Verizon Wireless Change This Agreement or my Service,” which stated:
We may change prices or any other term of your Service or this agreement at any time, but we’ll provide notice first, including written notice if you have Post-pay Service. If you use your Service after the change takes effect, that means you’re accepting the change. If you’re a Post-pay customer and a change to your Plan or this agreement has a material adverse effect on you, you can cancel the line of Service that has been affected within 60 days of receiving the notice with no early termination fee if we fail to negate the change after you notify us of your objection to it.
Next he consulted the “Explanation of Charges” section of his bill.
Explanation of Charges
Verizon Wireless’ Surcharges
Verizon Wireless’ Surcharges include (i) a Regulatory Charge (which helps defray various government charges we pay including government number administration and license fees); (ii) a Federal Universal Service Charge (and, if applicable, a State Universal Service Charge) to recover charges imposed on us by the government to support universal service; and (iii) an Administrative Charge, which helps defray certain expenses we incur, including charges we or our agents pay local telephone companies for delivering calls from our customers to their customers, fees and assessments on our network facilities and services, and costs and charges associated with proceedings related to cell sites, local number portability, and other government mandates. Please note that these are Verizon Wireless charges, not taxes. These charges, and what’s included, are subject to change from time to time.
Taxes, Governmental Surcharges and Fees
Includes sales, excise and other taxes and governmental surcharges and fees that we are required by law to bill customers. These taxes, surcharges and fees may change from time to time without notice.
Finally, the customer sat down and said clearly, in writing, what bothered him and what he wished Verizon to do about it. What bothered him was the 46% price increase. What he wished Verizon to do was reverse the increase–not, for example, the entire Fed Universal Service Charge altogether, just the increase. A simple request, one that, at most, might have reduced Verizon’s monthly surcharge take by twelve dollars over the next year.
He sent the letter to Verizon but received no response. Days passed. Weeks passed, and still no response. So the customer exercised his option to terminate the contract with no early termination fee, pursuant to the section of his customer agreement referenced above. Here’s how that broke down:
- He was a post-pay customer (meaning he was in a contract).
- The price increase was a change that had a materially adverse effect on him (meaning it stood to cost him more money).
- Sixty days had not yet gone by since the price increased on his bill.
- He notified Verizon in writing of his objection to the price increase.
- Verizon did not negate the change (meaning rescind the price increase).
He terminated his Verizon contract and switched to a new carrier. Weeks later, he received a bill from Verizon for an early termination fee. He wondered, “does Verizon not read its own policies as set forth in the customer agreement?” It would seem not, because this customer took great pains to comply with the terms of the customer agreement but still received a bill for early termination fees from Verizon. Maybe Verizon just needed some time to connect the dots, right?
So after receiving the bill for the early termination fees, he wrote another letter to Verizon stating the facts of his departure and the actions that he took pursuant to the customer agreement. He expected Verizon to realize their mistake and rescind the early termination fees. Instead, he received the above response from Julius Morris. And so the con began.
I’ve written before about how carriers try to convince customers that surcharges are fees that customers are mandated to pay by state and federal agencies. If you’ve read that piece, then you know that this is a lie. Only carriers are mandated to pay fees like the Fed Universal Service Charge. Customers pay the fee only because carriers slip it on every customer’s bill.
Mr. Morris’s carefully crafted (if canned) statement is intended to divert your attention from the fact that Verizon chooses to charge customers this fee: “The Federal Universal Service Charge is not a charge set or regulated by Verizon Wireless.” This sentence is cleverly ambiguous. On one hand, it could mean that carriers don’t set or regulate the fee that carriers must pay to the federal agency that administers the federal universal service fund. On the other hand, it could mean that Verizon does not set or regulate the fee that customers must pay to Verizon. This second meaning is false, but Verizon knows that most customers will read and interpret the statement based upon what it means for the customer. This is how Verizon positions itself for both defense against making false claims and defense against customers who object to paying whatever fee Verizon decides to pad bills with.
Fragments distract readers. So as a device to defend against this customer who has proven savvy enough to get out of his Verizon contract, pursuant to the customer agreement, with no early termination fees, fragments are useful: “This charge, including the fact that it varies quarterly based on a rate set by the Federal Communications Commission, as described in the Plan brochure when you established service with us.” For this customer, who is a careful reader of details, this sentence is difficult to process. On one hand, it fails to complete a thought. On the other hand, it sounds really official and even references one authoritative agency and one authoritative document. Nonetheless, the sentence is not a sentence and thus says nothing.
Irrelevant History Lesson
Remember, this customer has already jumped through all Verizon’s hoops. He’s already done his homework, learned the proper procedures and complied with the customer agreement. The customer’s initial issue was a 46% price increase, and now it’s an invalid early termination fee. A history lesson on Federal Universal Service Charge is not relevant to resolving this customer’s issue: “It supports a fund created by the Federal Government to promote universally affordable telecommunications to all American consumers, including low-income consumers, all eligible schools and libraries and rural health care providers.” It does nothing more than hijack the conversation away from the customer’s issue, giving Verizon a poetic license to lecture on anything it wishes other than the details of the customer’s issue or how to resolve it.
I’ve read enough responses from Verizon and other carriers to notice a pattern in how they argue. Reps often appeal to authoritative documents that they assume were part and parcel of your customer history. For example, Mr. Morris references “the Plan brochure when you established service with us” and “the terms you accepted at the time of your contractual agreement.” The problem is that Mr. Morris was not there when this customer established service with Verizon. Nor has Mr. Morris likely expended effort to track down any Verizon rep who was there. Since “the Plan brochure” is not something a prospective Verizon customer has to touch or sign, it is actually quite likely that this customer has never even seen this document. The only way to disprove my hunch would be for Verizon to produce the document with the customer’s dated signature on it. That won’t happen, of course, because Verizon finds it too useful, instead of making every important document physically part of the contracts new customers sign, to stash these documents at the four corners of the earth and then just reference them as Mr. Morris does. Bottom line: if this customer never touched, saw, or signed this “Plan brochure” as part of the contract, then it’s not part of the contract.
Mr. Morris references the “Explanation of Charges” section on the customer’s bill: “It is also described on each of the bills we send to you, located on page 2.” But he fails to acknowledge that the statements in that section of the bill contradict his own statements included in his letter, particularly the part about who sets the Federal Universal Service Charge. His opening statement says that Verizon does not set or regulate the Federal Universal Service Charge, and we’ve already diagrammed the two possible meanings of that statement. But if we use just the honest meaning of that statement–that the feds set it–then we find a contradiction when we read the section of the customer’s bill Mr. Morris references only sentences later, which, regarding the Federal Universal Service Charge and other surcharges, says: “Please note that these are Verizon Wireless charges, not taxes.” So here, Mr. Morris is caught in a lie. Which is it? Either Verizon sets the fee, or it does not. But, Mr. Morris, you cannot have both.
Remember that this customer only objected to the 46% increase, not the entire Federal Universal Service Charge. Mr. Morris, however, realizing that the increase represents an opportunity for the customer to leave Verizon, chooses to pretend as though the customer asked to not pay the entire fee:
The FUSC cannot be waived without a valid exemption. No accounts are categorically excluded from being charged the FUSC. An account can only be excluded by contract or if an exemption certificate is on file.
This customer is not asking for an exemption or exclusion, just the right to object when the fee increases–which it did.
The last thing to note is that Mr. Morris’s response was a canned, general statement. Notice how he opens the letter with info specific to the customer and ends with info specific to the customer. But in the middle, he’s merely pasted a canned, carefully crafted response intended to derail any customers who raise concerns over the Federal Universal Service Charge. This suggests that Mr. Morris either did not read and consider the merits of this customer’s objection letter or he chose to ignore them because they were too compelling. My money’s on the second one.
When arguing against paying the Federal Universal Service Charge, argue against increases, not the entire fee itself. Then when Verizon responds with a letter that contains any of these diversion tactics, call them on it. You’re only objecting to the increase, and pursuant to the terms of the customer agreement, Verizon has only one choice: reverse the fee increases immediately or lose you as a customer–with no early termination fees.