Verizon Wireless, a joint ownership of Verizon Communications Inc. and the Vodafone Group PLC, had sold laptop cards with limited capabilities for wireless Internet access.
For $59.99 the company was offering an “unlimited monthly usage plan,” despite the fact that the service had limitations (Sharma & Cheng, 2007). Customers were not able to use their laptop cards for “high bandwidth activities,” for example, to download movies (Sharma & Cheng). Moreover, Verizon Wireless had not mentioned the limitations of its laptop cards in advertisements (Sharma & Cheng).
Following an investigation by the State Attorney of New York, Verizon Wireless was required not only to agree to change its “‘unlimited’ advertising” of the wireless broadband service, but also to reimburse the customers with $1 million in all (Sharma & Cheng). Besides, the company was required to pay $150,000 in fees and penalties to New York. Verizon Wireless agreed to meet all of the legal conditions (Sharma & Cheng).
The case of the laptop cards sold by Verizon Wireless concerned deceptive advertising. The company had referred to its service as an unlimited plan in spite of its limitations. Customers should have been informed about the limitations before they purchased the service.
Thankfully, the New York State Attorney intervened to compel the company to reimburse the customers. As a matter of fact, this aspect of business law is vital for consumer protection against company fraud.
Deceptive advertising includes misrepresentation and omission. Perhaps Verizon Wireless had mistakenly omitted the limitations of its service in its advertising. Nevertheless, it was required to pay for its mistake.
This serves as a warning for all companies in the U.S. Furthermore, the business regulatory departments around the country must continue to evaluate all advertisements seeing that imperfect information is a source of market failure.
Sharma, A., & Cheng, R. (2007, Oct 24). Verizon Wireless Reaches Deal in Marketing Probe.
The Wall Street Journal, pp. B5.