THE Consumer Financial Protection Bureau on Wednesday, Dec. 17, sued Sprint for “cramming” its customers by illegally billing them for millions of dollars in unauthorized charges.
“Consumers ended up paying tens of millions of dollars in unauthorized charges, even though many of them had no idea that third parties could even place charges on their bills,” said Richard Cordray, director of the bureau, according to The New York Times. “As the use of mobile payments grows, we will continue to hold wireless carriers accountable for illegal third-party billing.”
The bureau alleges that Sprint crammed unauthorized charges into its customers’ bills from 2004 to 2013 through services such as text-message horoscopes, ringtones and other digital content that customers did not ask for. Additionally, the company retained 40 percent of the gross revenue, according to the bureau.
The Federal Communications Commission (FCC) is also investigating the matter, and the Times reports that the wireless provider would be pay $105 million in refunds and restitution under a settlement.
Stephanie Walsh, a spokeswoman for Sprint, said the company disagrees with the bureau’s depiction of its business practices.
“We are disappointed that the C.F.P.B. has decided to target Spring on this issue, and we strongly disagree with its characterization of our business practices. Sprint took considerable steps to protect wireless customers from unauthorized third-party billing and is an industry leader in proactively preventing unauthorized charges,” she said in a statement.
The lawsuit against Sprint is the third cramming-related incident of 2014 involving government enforcement.
T-Mobile was sued in July by the Federal Trade Commission (FTC) for a similar reason and will pay at least $90 million as part of its settlement. AT&T settled a case regarding billing issues with the FCC and FTC in October.
Kim Hart, an FCC spokeswoman, said in a statement: “Together, we are pursuing joint enforcement actions to protect consumers from unauthorized fees on their wireless bills. Our agencies have agreed to continue our close cooperation on this and other cases on behalf of wireless customers nationwide.”
(With reports from Los Angeles Times, Reuters and The New York Times)
(www.asianjournal.com)
(LA Weekend December 20-23, 2014 Sec. D pg.2)
