Verizon has agreed to pay $1.375 million to Maryland customers to settle charges that it misled them about the price of its FiOS fiber-to-the-home service and failed to deliver promised promotional items including free televisions, Maryland Attorney General Douglas Gansler announced Wednesday.

"The settlement follows a wide-ranging investigation of Verizon, including its alleged failure to deliver promised promotional items to new FiOS customers, such as free televisions and gift cards; its offer of bundled prices that did not include the cost to lease equipment necessary to receive the services; its alleged practice of assessing early termination fees when customers cancelled after they did not receive what they had been promised; and other issues, including billing complaints, contract disputes, and poor customer service," the announcement said. "Although Verizon denied that it violated any Maryland laws, it agreed to a settlement that addresses the Division's concerns."

New FiOS customers reported in 2008 that they didn't receive the free TV Verizon promised them in exchange for signing up for service.

Verizon will "directly provide restitution to eligible current customers" while the state's Consumer Protection Division will notify former customers that they are eligible for refunds. The $1.375 million will be paid back to customers who allegedly were "improperly charged termination fees or paid equipment fees not adequately disclosed in Verizon's advertising." Verizon will pay another $325,000 to the state to cover a civil penalty and investigation costs.

Verizon also agreed to make its price advertising more accurate and to give customers "clearer written disclosures of the terms of their orders and give customers broader cancellation rights if their first bills do not accurately reflect their orders."

"Verizon's activities when it was rolling out FiOS established it as one of our office's biggest complaint generators," Gansler said. "I'm pleased that Verizon is changing its marketing practices to accurately reflect the total cost of its services and that a significant number of consumers will receive restitution as a result of this agreement."

Verizon agreed in the settlement to honor all price guarantees and to let customers who don't receive promised promotional prices cancel without penalty. Gansler's announcement said Verizon also agreed that it will no longer "offer promotional items it cannot deliver."

UPDATE: Verizon spokesperson Harry Mitchell contacted Ars with this statement: "This settlement concludes an investigation that dates back to 2008, when Verizon was a new entrant in the pay-TV market. In the ensuing years, the improvements and enhancements we have made in serving customers have addressed many of the issues raised by the Consumer Protection Division. That’s borne out by numerous independent customer satisfaction studies in which Verizon FiOS ranks highest among pay-TV providers. While Verizon’s advertising practices complied with all laws and regulations, it’s in the best interest of all parties for us to resolve this long-running matter so that we may continue our focus on providing Maryland consumers with a superior product and a good customer experience."