WASHINGTON-- Sprint Corp and Verizon Wireless will pay a total
of $158 million to resolve claims by U.S. regulators that the
wireless carriers separately billed customers millions of dollars
in unauthorized charges for premium text messages, authorities said
Tuesday.
The payments, $90 million from Verizon and $68 million from
Sprint, include $120 million in refunds to affected customers, the
Consumer Financial Protection Bureau said. The remaining $38
million is to be paid in federal and state fines, the agency
said.
The action by the CFPB, Federal Communications Commission and
several state attorneys general is the latest in a string of cases
regulators have brought against wireless companies over the
so-called "cramming" of unauthorized third-party charges onto
cellphone bills.
Both Verizon and Sprint neither admitted nor denied the
allegations as part of the settlement.
A Verizon spokesman said the company had stopped allowing
companies to place charges for premium text message services on
customers' bills "well before any government action."
A Sprint spokesman said the settlement gives customers who
believe they were wrongfully billed the ability to get a refund.
The company also said it had returned "tens of millions of dollars
long before the government initiated its investigation of our
industry."
Last fall, AT&T Mobility agreed to pay $105 million and
T-Mobile USA, Inc. agreed to pay $90 million to resolve similar
cases.
"For too long, consumers have been charged on their phone bills
for things they did not buy," FCC Chairman Tom Wheeler said.
At issue are payments customers made to purchase apps on their
phones. The purchases would appear as charges on customers' phone
bills, but the wireless carriers outsourced the processing of the
payments to third-party vendors, the consumer bureau said.
Those vendors would often bill for premium messages associated
with providing the purchases, ranging from one-time fees of under
$5 to monthly subscriptions of $9.99, regulators said. Customers
might purchase a monthly subscription for dating tips, horoscopes,
or sports scores without realizing that the subscriptions also
included a premium text messaging fee, according to the CFPB's
complaints. Sprint and Verizon would get a 30% to 40% cut on the
gross revenue, according to the agency.
Wireless carriers generally no longer use the premium messaging
services at issue, used generally through 2013.
The Sprint settlement comes after the CFPB sued the company over
the alleged conduct in December.
Write to Gautham Nagesh at gautham.nagesh@wsj.com
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