Verizon Wireless settles N.Y. probe into marketing

NEW YORK (Reuters) - Verizon Wireless has agreed to settle a probe into the marketing of its Internet usage plans and reimburse $1 million to customers for wrongful account termination, the New York attorney general said on Tuesday.

The company, which is owned by Verizon Communications Inc and Vodafone Group Plc, also agreed to pay $150,000 in penalties and costs to New York state and revise marketing of its wireless Internet access plans, Attorney General Andrew Cuomo's office said in a statement.

The state probe found that Verizon Wireless had marketed its NationalAccess and BroadbandAccess plans as "unlimited," without disclosing that actions such as downloading movies or playing games online were prohibited, Cuomo's office said.

The company also cut off heavy Internet users for exceeding an undisclosed cap of usage per month, the state regulator said.

From 2004 until April of this year, Verizon Wireless terminated more than 13,000 consumers nationwide for "excessive" use of these plans, according to Cuomo's office.

It said Verizon Wireless agreed to reimburse all terminated consumers for the cost of wireless access cards or cell phones they bought for the service.

Verizon Wireless, which voluntarily cooperated with the AG's office, was not immediately available for comment.

The settlement came after a nine-month investigation into the marketing of the plans, Cuomo's office said.

"When consumers are promised an 'unlimited' service," Cuomo said, "they do not expect the promise to be broken by hidden limitations."

(Reporting by Paritosh Bansal)