According to a Federal Communications Commission announcement on Tuesday, May 12th, mobile service providers Verizon and Sprint have agreed to pay a combined $158 million to settle charges they were billing customers for unauthorized charges.
This settlement is the latest case where regulators have penalized phone companies for the practice known as “cramming.” Federal and state regulators have collected a total of $353 million in penalties from the four largest U.S. wireless carriers.
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Cramming typically involves a third party charging for products or services such as premium text messaging, insurance or warranties through a phone bill.
Statement from FCC enforcement bureau
“Consumers rightfully expect their monthly phone bills will reflect only those services that they’ve purchased,” Travis LeBlanc, chief of the FCC’s Enforcement Bureau, noted in Tuesday’s statement. “Today’s settlements put in place strong protections that will prevent consumers from being victimized by these kinds of practices in the future.”
More on Verizon, Sprint mobile cramming charges
When broken down, Verizon and Sprint are respectively paying $90 million and $68 million to settle the cramming charges. Of note, a minimum of $120 million will be used to reimburse consumers hit with the fraudulent charges.
The investigation by the FCC revealed that Verizon and Sprint had charged customers for premium third-party text message services without written authorization. The firms typically charged fees of around $10 per month per customer.
Moreover, Verizon and Sprint both kept at least 30% of the millions in unauthorized fees they billed. The FCC noted that many consumers complained that they had been denied refunds for the charges.
The FCC is also planning to implement additional consumer protections against cramming. New rules will require wireless carriers to no longer charge for third-party messaging services, and also to clearly identify all third-party fees on customer bills.
AT&T and T-Mobile also settled cramming charges last year, agreeing to to pay $105 million and $90 million, respectively, to end investigations.