Suit alleges Verizon Wireless text service amounts to illegal gambling

A class-action suit filed against Verizon Wireless and third-party content providers in California federal court alleges the No. 2 mobile-phone operator enticed subscribers to engage in illegal gambling. The suit centers on 99-cent charges levied on wireless consumers who played contests associated with popular TV shows like “Deal or No Deal” and “Sole Survivor.”
“At all times relevant during the liability period, the premium charge of $0.99 purchased nothing except a chance to win a prize. The games were not used as a sweepstakes to promote a product, but rather were illegal lotteries designed to generate revenues far in excess of the value of the cash awarded,” the suit stated.
Verizon Wireless said it does not comment on pending litigation.
The plaintiffs’ lawyers said Verizon Wireless’ premium text messaging was the main means — as well as well as the easiest and most expeditious manner — of entering the contests.
“The chances of winning are infinitesimally less than the odds posed by the number of choices offered,” stated the suit. “Having placed their $0.99 wager with and through defendants along with hundreds or thousands (if not tens of thousands) of other subscribers, only those individuals who selected the correct answer are even entered into a subsequent pool of those who guessed correctly. From that pool of entrants, one random winner is selected to receive the cash prize. The first randomly selected potential winner for each episode that answers or returns the notification phone call is declared the winner (subject to verification and satisfaction of other miscellaneous conditions, such as proof of age).”
The suit, filed in U.S. District Court for the Central District of California, accuses Verizon Wireless and others of violating California’s Consumer Legal Remedies Act and the state’s Unfair Competition Law.
Plaintiffs’ lawyers acknowledged Verizon Wireless’ service contracts with subscriber contestants include a class arbitration ban, but they maintain the litigation does not implicate such contracts and that such a ban is otherwise unconscionable and unenforceable.
AT&T suit
On a related front, a class-action lawsuit moving forward in federal court in Washington state argues the class-action ban in AT&T Mobility’s service contracts should be invalidated.
“At stake here is the right of AT&T customers to get a fair hearing and obtain justice,” said Harvey Rosenfield, a lawyer with the non-profit Foundation for Taxpayer and Consumer Rights. “If the court rules that AT&T and Cingular’s customers cannot join together to sue these companies, then the companies will never be held accountable.”
Plaintiffs said that when then Cingular Wireless bought then-AT&T Wireless, in 2004, it promised regulators and the public that customers would continue to enjoy the same quality service. However, after the merger, according to the 2006 lawsuit, Cingular deliberately degraded the quality of the AT&T network in order to force AT&T customers to move to Cingular’s network, pay an $18 upgrade fee, buy new phones and sign up for new two-year plans. Dissatisfied consumers who wanted to move to a different company were required to pay early termination fees of $150 or more.
“AT&T makes much of the window-dressing terms it has tacked on to its arbitration clause to hide the impact of its class-action ban,” said Leslie Bailey of Public Justice. “But we are confident that once the court looks at all the evidence, it will recognize that without a class action, these customers would not be able to hold the company accountable.”
AT&T defended its approach to settling consumer grievances.
“We continue to believe that a consumer is better off pursuing a claim under our arbitration clause, rather than pursuing a class action,” the No. 1 wireless carrier stated. “Arbitration is typically a fast, cost-effective, and pro-consumer way to address disputes, and AT&T’s arbitration agreement is among the most consumer-friendly in the nation.”
“In fact,” AT&T added, “a year and a half ago we changed our arbitration clause to make it even more consumer friendly. Our current arbitration clause calls for the company — if it does not settle a consumer complaint and loses arbitration — to pay the greater amount of either the arbitration or the state’s statutory definition of a small claim (commonly $5,000). Also, if the consumer has used a lawyer in winning an arbitration case, the company would pay two times the lawyers fees. Finally, we pay the entire cost of the arbitration.”