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Verizon to pay Uncle Sam $93.5M in overcharge dispute

Verizon today agreed to pay the United States government $93.5 million to settle allegations that it had systematically overcharged federal agencies.

According to the original complaint filed against Verizon in 2007, MCI starting in 1999 began overcharging the government by "submitting invoices for payment to the United States for certain surcharges ... that it is prohibited from charging the United States under Federal Acquisition Regulations ... and the FTS 2001 contract." The complaint also alleged that MCI submitted charges that "inflated above any charge that MCI had incurred." Because Verizon and MCI merged in 2006, the complaint claimed that Verizon bore responsibility for MCI's "knowing submission of overcharges."

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"Verizon was not only charging the government for the costs associated with communication services, but it also was pumping up its revenues by charging the government for Verizon's own property taxes and other costs of doing business," said attorney Colette Matzzie of the law firm Phillips & Cohen LLP, which filed the original complaint against Verizon. "Under federal law, Verizon was responsible for paying those costs, not the government."

The settlement announced today marks the second time in less than a year that Verizon has agreed to pay tens of millions of dollars for alleged overcharges. Last fall, Verizon Wireless agreed to pay the Federal Communications Commission $25 million for allegedly slapping its customers with unexpected "mystery fees" such as data charges for customers who didn't actually have data plans. Verizon also agreed to pay consumers across the United States refunds worth a total of $52.8 million to make up for incorrect charges.

A survey commissioned by the FCC last year found that nearly 1 in 5 American consumers has been subject to sudden and unexpected rises in their monthly cellular phone bills. The FCC survey, which was conducted by research firms Abt/SRBI and Princeton Survey Research Associates, found that 17% of U.S. cellphone users said that their bills had "increased suddenly from one month to the next [even if they] did not change the calling or texting plan" they subscribed to.

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