Maui Business

Sprint & Verizon ‘Cramming’ Victims to Get $120 Million

May 12, 2015, 1:20 PM HST
* Updated May 12, 1:24 PM
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By Maui Now Staff

The Hawaiʻi Department of Commerce and Consumer Affairs’ Office of Consumer Protection, the attorneys general of the other 49 states and the District of Columbia, the Consumer Financial Protection Bureau and the Federal Communications Commission reached a settlement of $158 million with Sprint and Verizon, resolving allegations that the two mobile telephone companies added third-party service charges to consumers’ mobile telephone bills that were not authorized by the consumers. Sprint will pay $68 million and Verizon will pay $90 million. Of these amounts, Sprint and Verizon are required to provide $50 million and $70 million, respectively, to consumers who were victims of cramming (see below for redress program details).

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Sprint will also pay $12 million to the attorneys general and $6 million to the FCC. Verizon will also pay $16 million to the Attorneys General and $4 million to the FCC.

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Consumers who have been victims of “mobile cramming” usually see charges (typically, $9.99 per month) for “premium” text message subscription services (“PSMS” subscriptions), such as horoscopes, trivia and sports scores that consumers never requested.

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Sprint and Verizon are the third and fourth mobile telephone providers to enter into a nationwide settlement to resolve “cramming” allegations. OCP announced similar settlements with AT&T in October 2014 ($105 million), and T-Mobile in December 2014 ($90 million).

All four mobile carriers announced they would cease billing customers for commercial PSMS in the fall of 2013.

“No consumer should have to pay for something that they never ordered,” said Stephen Levins, executive director of the Office of Consumer Protection. “This settlement is significant, because it corrects an industry practice that facilitated the improper posting of charges to consumers’ phone bills.”

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The two companies will distribute refunds to harmed consumers through redress programs that will be under the supervision of the CFPB.

Redress Program Details

  • Consumers can submit claims under the redress programs by visiting SprintRefundPSMS.com and/or CFPBSettlementVerizon.com.
  • On those websites, consumers can submit claims, find information about refund eligibility and how to obtain a refund, and can request a free account summary that details PSMS purchases on their accounts.
  • Consumers who have questions about the redress programs can visit the program websites or call (877) 389-8787 (Sprint), and/or (888) 726-7063 (Verizon).

Like the settlements entered into by AT&T and T-Mobile in late 2014, these settlements also require Sprint and Verizon to stay out of the commercial PSMS business–the platform to which law enforcement agencies attribute the lion’s share of the mobile cramming problem. Under each of the four settlements, the carriers must also take a number of steps designed to ensure that they only bill consumers for third-party charges that have been authorized, including the following:

  • The carriers must obtain consumers’ express consent before billing consumers for third-party charges and must ensure that consumers are only charged for services if the consumers have been informed of all material terms and conditions of their payment;
  • The carriers must give consumers an opportunity to obtain a full refund or credit when they are billed for unauthorized third-party charges;
  • The carriers must inform their customers when they sign up for services that their mobile phone can be used to pay for third-party charges, and must inform consumers of how those third-party charges can be blocked if the consumers do not want to use their phone to pay for third-party products;
  • The carriers must present third-party charges in a dedicated section of consumers’ mobile phone bills, must clearly distinguish them from the carrier’s own charges, and must include in that same section information about the consumers’ ability to block third-party charges.

The State of Hawaiʻi received $316,739.24 for its participation in the Sprint and Verizon settlements. The national mobile cramming settlements with the four mobile carriers have netted the State of Hawaiʻi $747,371.18.

OCP Enforcement Attorney Landon M. M. Murata represented the state in this case.

 

 

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