I thought it was ruled illegal in California courts, you profile says you live in MN.

Also, just because the courts(in California) ruled it illegal doesn't mean it won't end up on your credit reports. You need to deal with VZ CS and get them to waive the fee if it is truly illegal, you can't just not pay and expect it to go away. Disputing with the CRAs isn't going to do anything. You'd better fix this quickly before AMEX does its monthly soft pull or get ready for FR and CLD.