Landline phone company Verizon Communications Inc. has agreed to pay more than $800,000 to settle charges that it overbilled Massachusetts cities and towns for phone service.
“This agreement ensures that cities and towns are repaid for losses on account of these billing errors,’’ Massachusetts Attorney General Martha Coakley, whose office negotiated the settlement, said in a statement.
Hundreds of local government entities in Massachusetts that contract with Verizon for telephone service were overcharged a total of $1.5 million, which Verizon has since refunded. The overbilling occurred in 2006, after inaccurate information was programmed into newly installed billing software, according to a statement issued by Verizon.
“It was simply a new billing system that was implemented, and the rates that were put into the system were incorrect,’’ said Verizon spokesman Phil Santoro. “A couple of our customers called us and questioned the amounts. . . . We went into it and looked into it, and said, ‘Yeah, you were right.’ ’’ But the statement from the attorney general’s office said the overbilling continued even after Verizon had been made aware of the problem.
The settlement announced yesterday includes $382,000 to the affected communities to cover interest on the amounts they overpaid. The interest payments vary widely among the affected towns; for example, the city of Worcester will get nearly $37,000, and Quincy is owed nearly $13,000. The city of Newton will receive a payment of $25.47.
Verizon must pay an additional $432,000 to the attorney general’s office to cover the cost of the investigation. Under the terms of the settlement, the company will not admit to any wrongdoing.
Mike Jude, a telephone industry analyst at research company Frost & Sullivan in Mountain View, Calif., said that because government and corporate users often require specialized phone services, errors in their bills are fairly common. “The probability of mis-billing increases with the complexity of the bill,’’ Jude said.
This isn’t the first time Verizon has gotten into hot water for its billing practices. The company reached a $93.5 million settlement with the Justice Department in April to settle claims that it had overbilled the federal government for voice and data service.
The Justice Department found that Verizon and its MCI Communications Services subsidiary charged the government for a variety of expenses not authorized under its contract. In addition, Verizon Communications owns just over half of cellphone carrier Verizon Wireless, which last October agreed to pay $25 million to settle an investigation by the Federal Communications Commission. The FCC had looked into charges from consumers complaining that Verizon Wireless was overcharging for cellular data service.