SBC to begin $12 million payout: customers get $25, lawyers, $1.9 million
Christmas may be a little sweeter for SBC customers. As a result of a $12 million class action settlement reached two months ago, claim forms entitling them to a $25 refund are being mailed in December statements.
By comparison, attorney's fees were a grand $1.9 million.
In October, Madison County Circuit Judge Nicholas Byron approved the settlement in a case involving plaintiffs Naomi R. Nichols-Siedhoff and James Vucich of Madison County. They filed suit March 2, 2001, alleging Ameritech (SBC) misled customers into believing they would save money with the SimpliFive optional rate plan, when in fact the plan would result in higher usage charges.
Stephen Tillery of the St. Louis law firm KoreinTillery represented the plaintiffs.
“We’re pleased to see that consumers who were misled into subscribing to SimpliFive will get some compensation,” CUB Executive Director Martin Cohen said. “And we hope SBC and the other phone companies will think twice before they try to mislead consumers in the future.”
Approximately 490,000 SBC customers who subscribed to the now-defunct calling plan are eligible for $25 in compensation, according to the Citizens Utility Board (CUB). The consumer advocacy group originally brought a complaint against SBC to the Illinois Commerce Commission (ICC) in 2000, claiming its marketing of the company's now-defunct SimpliFive call plan was misleading.
The ICC agreed and ordered the company to refrain from selling the plan as a money-saving option for consumers. But the commission had no legal authority to make SBC give customers refunds.
CUB had asked for $250,000 to help make it easier for people to get their refunds, which it would set aside to help Illinois consumers on future cases. Its request was denied in the settlement.
Under SimpliFive, which has not been offered since 2002, consumers paid a nickel per call for all calls up to eight miles away and five cents per minute for all other local calls. In its ICC complaint, CUB argued that only SBC customers who made a large volume of local toll calls would save money under the plan. The others who subscribed would pay more.
Data collected during the case confirmed this prediction. According to SBC’s own figures, 47 percent of all SimpliFive customers paid more on the plan than they would have on SBC’s standard rates.
“Due to the complexity of SBC’s rates, most customers had no way of knowing whether they lost or saved money on the plan,” Cohen added. “But the company has stated that all customers who believe they lost money will be compensated.”
In court, SBC valued the settlement at $12 million based on all 490,000 customers filing a claim. According to SBC, claim forms will be mailed out in December phone bills.