Verizon and Sprint to Pay $158 Million to Settle Mobile Cramming Case

WASHINGTON (Los Angeles Times/TNS) -

Verizon Communications Inc. and Sprint Corp. have agreed to pay a combined $158 million, including at least $120 million in consumer refunds, to settle federal and state investigations into allegations that mobile customers were improperly billed for premium text messages.

The so-called cramming of unauthorized charges onto customers’ bills involved one-time fees of 99 cents to $4.99 for third-party text-messaging services and monthly subscriptions to those messages that cost $9.99 to $14 a month, federal regulators said Tuesday.

Customers complained that they never authorized the charges, according to the Federal Communications Commission.

The FCC said that Verizon kept at least 30 percent of the fees charged by the third-party services. Sprint received about 35 percent of such fees paid by its customers, the FCC said.

The agency was joined by the Federal Trade Commission, the Consumer Financial Protection Bureau and the attorneys general of all 50 states and the District of Columbia in negotiating the settlements.

“Sprint and Verizon had flawed billing systems that allowed merchants to add unauthorized charges to wireless customer bills,” said Richard Cordray, the bureau’s director.

“Consumers bore the brunt of those charges and ended up paying millions of dollars while the companies reaped profits,” he said.

The companies are the latest wireless carriers to agree to major settlements of federal and state cramming allegations.

AT&T Inc. agreed to pay $105 million, including $80 million in refunds, in October. Two months later, T-Mobile US Inc. agreed to pay $90 million, including $67.5 million in refunds.

“For too long, consumers have been charged on their phone bills for things they did not buy,” said FCC Chairman Tom Wheeler.

Verizon agreed to pay $90 million — at least $70 million in refunds, $16 million to state governments and a $4 million federal fine. Sprint will pay $68 million, including at least $50 million in refunds, $12 million to the states and a $6 million federal fine.

The Consumer Financial Protection Bureau will oversee the refunds.

Verizon customers can submit claims at www.CFPBSettlementVerizon.com and can get more information by calling 888-726-7063. Sprint customers can submit claims at www.SprintRefundPSMS.com and can get more information by calling 877-389-8787.