The FCC’s Enforcement Bureau today announced that Sprint and Verizon Wireless will pay a combined $158 million to settle charges the carriers allowed unauthorized third party charges on customers’ bills, a practice known as cramming.
Verizon Wireless will pay $90 million and Sprint will pay $68 million to settle the investigations. Reuters previously reported Sprint would be paying as much as $50 million in a settlement expected Tuesday.
The complaint says Verizon kept 30 percent of each third-party charge and Sprint kept 35 percent. The charges ranged from $0.99 to $14 and averaged $9.99 per month.
The FCC alleges that customers who complained were denied refunds but that during the investigation the carriers were unable to provide proof of customers authorizing the charges.
“For too long, consumers have been charged on their phone bills for things they did not buy,” FCC Chairman Tom Wheeler said in a statement. “We call these fraudulent charges ‘cramming,’ and with today’s agreements we are calling them history for Verizon and Sprint customers.”
The majority of the settlements will go toward consumer redress programs while $10 million will go directly into the U.S. Treasury.
In addition to the fines, Sprint and Verizon have agreed to no longer offer commercial third-party premium SMS 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; and regularly report to the FCC on compliance and refunds to customers.
In 2013, the four big U.S. wireless providers agreed to stop offering the premium SMS services associated with cramming.
In October 2014 AT&T agreed to pay $105 million as part of a cramming settlement, of which $80 million was to be distributed among the plaintiffs. Months later T-Mobile agreed to settle a cramming lawsuit with the FTC for $90 million.
In total, the FCC says that $353 million in penalties have been levied against the four big U.S. carriers.
