Verizon, Sprint Pay $158M for 'Cramming' Bogus Charges

Josh WolfordBusiness

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The Federal Communications Commission has announced that Verizon and Sprint will pay a combined $158 million to settle "cramming" investigations, wherein the Commission found that the carriers were cramming unauthorized charges onto customers' bills.

The majority of such charges came from so-called "premium text services".

“For too long, consumers have been charged on their phone bills for things they did not buy,” said FCC Chairman Tom Wheeler. “We call these fraudulent charges ‘cramming,’ and with today’s agreements we are calling them history for Verizon and Sprint customers.”

The FCC describes the scheme as such:

The monthly charge for these third-party premium text messaging services ranged from $0.99 to $14.00, but typically were $9.99 per month. Verizon retained 30% or more of each third-party charge that it billed, while Sprint received approximately 35% of collected revenues for each of its third-party charges. Numerous consumers have complained to the FCC, other government agencies, and the carriers that they never requested or authorized the third-party services for which they were charged. Customers who called to complain were often denied refunds, and yet, when the FCC requested proof that customers had authorized charges, the carriers were unable to prove that these services were ever requested.

The majority of the settlement will go toward customer refunds, in fact. Verizon's $90 million chunk is divided as such: $70 million in refunds, $16 million for state governments, and a $4 million fine to the US Treasury. Sprint's $68 million portion is divided as such: $50 million in refunds, $12 million to states, and a $6 million fine.

"Consumers rightfully expect their monthly phone bills will reflect only those sevices that they've purchased,” said Travis LeBlanc, Chief of the FCC’s Enforcement Bureau. “Today’s settlements put in place strong protections that will prevent consumers from being victimized by these kinds of practices in the future."

With this joint settlement, all four major US carriers will have paid for their "cramming". Last year, both AT&T and T-Mobile settled for $105 million and $90 million, respectively.

Both Verizon and Sprint said that they rigorously "protect customers" and already have systems to refund premium text message charges in place.

Image via Thinkstock

Josh Wolford

Josh Wolford is a writer for WebProNews. He likes beer, Japanese food, and movies that make him feel weird afterward. Mostly beer.

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