It is a huge smoke and mirrors money maker for them. Customers continue to pay the same monthly amount for their plan (which includes the $15 or so for your subsidized phone), except they no longer are entitled to a subsidized phone. Instead, customers must make additional monthly payments for their phone. Win/win for Verizon. For customers? Not so much...
You can't really blame them though, it's no worse than what the credit card companies do. Basically you agree when you sign up. I don't think many people are naive enough to believe that they're getting a great deal.
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