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Texas Sues Sprint Nextel

Charges Company is Using Deceptive Billing Practices

February 15, 2007

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Texas Attorney General Greg Abbott has taken legal action to stop Sprint Nextel Corp. from using what he claims are deceptively worded wireless telephone fees.

According to the attorney general's lawsuit, Sprint Spectrum, a subsidiary of Sprint Nextel, violated the Texas Deceptive Trade Practices Act by implying that an additional fee on customers' bills was a state-imposed tax. Abbott also charged Sprint Nextel with violating a 2004 court order prohibiting the company from deceptive billing practices.

"Sprint Nextel has defrauded its customers and violated a court order, blatantly disregarding the laws of the State of Texas," Abbott said. "Texans will not tolerate Sprint Nextel's unlawful business practices. Once again, the Office of Attorney General is taking decisive legal action to crack down on Sprint Nextel's false, misleading, and deceptive acts."

In January, Sprint Nextel began charging Texas customers a 1 percent fee, claiming it was necessary to reimburse the company for a state-imposed tax.

Sprint Nextel describes this fee as a "Texas Margin Fee Reimbursement," wording which the Attorney General's lawsuit alleges is deceptive because the tax does not become effective until Jan. 1, 2008, and has not been set at a 1 percent rate.

The attorney general also charged Sprint Nextel with violating a court-approved agreement prohibiting Sprint from implying that their discretionary fees are required by the government.

The agreement stems from a 2004 investigation into Sprint's deceptive billing practices. Under the court order, the company is required to clearly separate government-mandated charges from those imposed at Sprint Nextel's discretion.

The lawsuit, which requests temporary and permanent injunctions against Sprint Nextel, asks the court to stop the deceptive billings and to compel the company to reimburse all customers who paid this fee. The petition also seeks civil penalties of $20,000 per violation under the Texas Deceptive Trade Practices Act.

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