Mobile carriers Verizon Wireless and Sprint will pay a combined US$158 million[m] to settle complaints by two U.S. government agencies that they billed millions[m] of customers for unauthorized, third-pay text messaging services.
Verizon will pay $90 million[m] and Sprint $68 million[m] to settle the so-called bill cramming complaints brought by the Federal Communications Commission and the Consumer Financial Protection Bureau.
Along with other recent federal and state actions targeting bill cramming, the nation’s four largest mobile phone carriers have agreed to pay $353 million[m] in penalties and restitution in recent months, with more than $267 million[m] set aside to be returned to affected customers, the FCC said on Tuesday.
“For too long, consumers have been charged on their phone bills for things they did not buy,” FCC Chairman Tom Wheeler said in a statement. “We call these fraudulent charges ‘cramming,’ and with today’s agreements we are calling them history for Verizon and Sprint customers.”
The monthly charges for the third-party premium text-messaging services ranged from $0.99 to $14.00, but often were $9.99 per month, the agencies said.
Verizon took a 30 percent cut for each third-party charge it billed, while Sprint received about 35 percent, and the text message charges generated “numerous” complaints to federal agencies, they said.
Under the agreements, Verizon’s settlement will include a minimum of $70 million[m] to fund a consumer redress program, $16 million[m] for state governments participating in the settlement, and $4 million[m] as a fine paid to the U.S. Treasury.
Sprint’s settlement will include a minimum of $50 million to fund consumer redress, $12 million[m] for state governments participating in the settlement, and a $6 million[m] fine. The settlements were negotiated in coordination with the attorneys general of all 50 states and the District of Columbia.
The settlements include requirements that both companies revamp their internal processes and change they way they disclose information to customers. The settlements also require that the two companies obtain informed consent from customers before allowing third-party charges, clearly identify third-party charges on bills and no longer offer commercial third-party premium text charges.
AT&T agreed to a $105 million[m] settlement last October, and https://apps.fcc.gov/edocs_public/attachmatch/DA-14-1704A1_Rcd.pdf”>T-Mobile USA to a $90 million[m] settlement in December.
Asked for comment, Verizon said that it no longer allows third-party billing for premium text services, a practice it says it stopped before the FCC’s action.
Meanwhile, Sprint has encouraged customers who believe they’ve been wrongly charged for text services to contact the company for refunds, and disbursed “tens of millions of dollars” in refunds before the government’s investigation started, according to a spokesman.