Verizon and Sprint To Pay $158 Million To Settle Mobile Cramming Investigations

The Federal Communications Commission Enforcement Bureau announced that Verizon Wireless will pay $90 million and Sprint Corporation will pay $68 million to settle investigations that revealed the companies billed customers millions of dollars in unauthorized third-party premium text messaging services, a practice called "cramming." With the two cramming cases, the FCC, working together with the Consumer Financial Protection Bureau, the Federal Trade Commission, and states' attorneys general has brought a total of $353 million in penalties and restitution against the US's four largest wireless carriers, structuring these settlements so that $267.5 million of the total will be returned to affected customers. 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 percent or more of each third-party charge that it billed, while Sprint received approximately 35 percent 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. In addition to requiring the carries pay a total of $158 million, the Enforcement Bureau has also secured strong consumer protections in the settlement that reform both internal processes as well as how the company interacts and discloses information to their consumers. These protections include requirements that the carries:

• no longer offer commercial third-party PSMS charges
• obtain informed consent from customers prior to allowing third-party charges
• clearly and conspicuously identify third-party charges on bills
• offer a free service for customers to block all third-party charges
• regularly report to the FCC on compliance and refunds to customers