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November 6, 2016

Verizon, Bait and Switch Is NOT Nice

By EconMatters

EconMatters is a financial and investing site, but we do occasionally write about improper practices we observed or experienced in Corporate America, the job market, or in a regular consumer business like Favor Delivery, Comcast Cable (Nasdaq: CMCSA), or Fandango. In doing so, we also received quite a few reader comments to stop 'whining' and just 'suck it up'.  

Sorry to disappoint but EconMatters still believes 'Doing the Right Thing' is important regardless of the actual monetary amount involved.  If we all simply 'suck it up', the United States would still be part of Britain.  

Today, I'm going to talk about a personal saga of 'Bait and Switch' by Verizon (NYSE: VZ).    

Too Good to Be True?

I have two cell phone lines (on a Shared Plan) with Verizon for about three years now. Six months ago, i.e., in May 2016, I upgraded both of my phones to a newer model at a Verizon store.  The store sales person verbally told me my two lines qualify for an additional Verizon promotion of waived 2nd line access fee ($20 per month) for 12 months.  The sales person even talked to his manager on the phone in front of me to verify and confirm that I qualified for the discount.

I was on the fence about upgrading both phones at the same time due to the cost factor, while still evaluating options from other cell carriers.  This 'confirmed' discount that I supposedly would get actually incentivized me to take the plunge and commit to Verizon.

Fast forward to July 2016, I did not see the discount reflected on my bill, so I went into the Verizon Store where I originally got the phones to inquire.  I was advised to allow three billing cycles for the discount to show.  Then September rolled along, still nothing happened.  I went to the Verizon store again, and this time I was advised to contact Verizon Customer Service since the store is a separate company from Verizon.  

A Verizon Store Is Not Verizon?

It turns out even though the store sign prominently displays Verizon logo and Verizon name, it seems at least this particular "Verizon Store” is operated by a company called Cellular Sales based in Knoxville, TN.  According to its web site,
"Cellular Sales is a management company that operates authorized wireless phone stores for Verizon Wireless throughout the United states."  

Red flag already raised in my mind at the time.  I still went through the process of contacting Verizon Customer Service and was advised Verizon could not honor the discount since my account did not qualify for that specific promotion.  The Verizon Customer Service Rep went on to say I had to go back to the Store for resolution since the Store is not part of Verizon (sounds familiar?), and he was 'very sorry' for this 'mis-understanding'.  

Absolutely No Mis-understanding!

So I followed up with the Verizon Store sales person again demanding a resolution.  It is now November, 6 months after.  The latest development is a text from the sales person a few days ago:   
"I already discussed with the Account Manager and Verizon Corp for 3 hours to explain everything.  But decision is up to Verizon.  We as a retailer always get run under bus by Verizon and their Customer Services.  Me, my company and the Director of our company had talked and sent information to resolve but as I said it is totally up to Verizon"

One thing is obvious -- there was no mis-understanding between Cellular Sales and myself.  Instead, Verizon, a $191-billion company in market cap, is simply trying to save a buck ($240 in this case) by stiffing a customer. 

Verizon Store = Agent of Verizon!  

Ok, I get it, these are two separate entities as I’ve been abundantly informed by both.  This has become almost like a justification to bounce the ball back and forth between the two with the customer (me) stuck in the middle.  

Well, let's just examine the concept of "We are two separate companies thus Verizon is not obligated by the verbal contract of Celluar Sales."  

According to its web site, Cellular Sales is an entity providing services exclusive to Verizon, and folks, that is called an "Agent" according to the Agency Law. The Agent-Principal concept could be described as excerpted from Wikipedia:

A business owner often relies on an employee or another person to conduct a business. In the case of a corporation, since a corporation is a fictitious legal person, it can only act through human agents.

An agent who acts within the scope of authority conferred by his or her principal binds the principal in the obligations he or she creates against third parties. … If it is subsequently found that the alleged agent was acting without necessary authority, the agent will generally be held liable.

Of course, the specific terms between Cellular Sales and Verizon are outside of my purview.  However, it seems unless Verizon is saying Cellular Sales did not act within the scope of authority, which I’m certain Cellular Sales will beg to differ, Verizon should honor the verbal contract by Cellular Sales.     

It is the Principle, Stupid!
  
I can only imagine how often similar tactics could have taken place where a Verizon Store/Cellular Sales would throw in some fab “discount” to seal the deal with a customer, and Verizon would turn around deny it a few months later.  By then, the customer had too much time, money invested to pull the plug going to a Verizon competitor.  Eventually, the customer most likely would drop the case out of frustration, while Verizon would still get to keep the customer.      

Now, I am expecting readers making fun that I went through all this academic research over a mere $240 (well, the same question should be asked of Verizon for making a customer jump through so many hoops).  However, it is the principal that matters.  Neither Verizon nor Cellular Sales can continue doing business like this taking advantage of regular consumers with already too much to do and too little time to fight relatively small-dollar complaints.     

Where Is the 'Free Market'?

There is a reason why Halliburton and Baker Hughes $28 Bn merger was recently called off due to stiff anti-trust challenges, and why Ma Bell was broken up in the 80's by Government mandate.  Too much consolidation in niche sectors is very bad for consumers.  

From personal experience, I do see Cable and Cellular Service sectors in the U.S. have both become too concentrated with too few providers for consumers to benefit from the so-called Free Market system.  
   
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Item Reviewed: Verizon, Bait and Switch Is NOT Nice Rating: 5 Reviewed By: EconMatters