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Verizon Communications is to cough up $1.75 million to end an enquiry into customers switching to its long-distance phone service in New York.

The US' biggest local phone company will pay $1.5 million to around 34,000 customers in the area and $250,000 to the US treasury under an agreement with the Federal Communications Commission.

The dispute centred around customers changing their long distance carrier to Verizon - the New York-based company had not stored its records correctly, making it hard to prove that verification actually took place.

Verizon, previously Bell Atlantic, started the service in the New York area in January, and now wants to expand into Massachusetts. But rivals fear it will use its local customer base to exclude long-distance phone companies.

The New York customers will get credit for the long-distance charges from the time they left their previous phone company to when Verizon established, through a follow-up contract, that they wanted to change to its service.

David Solomon, chief of the FFC enforcement bureau, said there was no evidence Verizon had switched customers to its service without their permission. ®

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