It's Verizon and Sprint's turn to pay refunds and penalties for illegally "cramming" their mobile customers. The Consumer Financial Protection Bureau says the companies will pay $120 million in redress to wireless customers who were illegally billed hundreds of millions of dollars in unauthorized third-party charges and will pay $38 million in fines.
AT&T and T-Mobile reached similar settlements earlier, paying $105 million and $90 million respectively.
Verizon customers can submit claims for refunds at http://www.CFPBSettlementVerizon.com or can learn more information about the Verizon settlement by calling 888-726-7063. Sprint customers can submit claims for refunds at www.SprintRefundPSMS.com or can learn more information about the Sprint settlement by calling 877-389-8787.
“Sprint and Verizon had flawed billing systems that allowed merchants to add unauthorized charges to wireless customer bills,” said CFPB Director Richard Cordray. “Consumers bore the brunt of those charges and ended up paying millions of dollars while the companies reaped profits. Today’s actions will put $120 million back into the pockets of harmed consumers and require these companies to improve their billing practices going forward.”
The CFPB alleges that the companies operated billing systems that allowed third parties to “cram” unauthorized charges on customers’ mobile-phone accounts and ignored complaints about the charges.
Today’s actions are being taken in coordination with the state attorneys general and the Federal Communications Commission (FCC). Under the proposed terms, the CFPB will oversee $120 million in consumer refunds. The companies will also pay $38 million in federal and state fines.
The charges were such things as apps, games, books, movies, and music. The purchases appeared as charges on consumers’ phone bills even though many consumers had not actually ordered the products.
Wireless carriers collect and process payments for these purchases and control the networks connecting merchants and customers. From about 2004 through 2013, nearly all wireless carriers’ third-party billing involved products called “premium text messages” or “premium short messaging services” because they were frequently delivered by text messages.
Sprint and Verizon outsourced payment processing for these digital purchases to vendors, but failed to properly monitor them, allowing the third-party vendors nearly unfettered access to consumers’ wireless accounts.
The Federal Communications Commission and the attorneys general of 50 states and the District of Columbia joined in the action.
“To boost their profits, Sprint and Verizon deceived consumers and added unauthorized charges to their monthly bills,” California Attorney General Kamala Harris said. “This settlement holds Sprint and Verizonaccountable for their actions, ends these bad business practices and refunds consumers.”
Most consumers were targeted online. Consumers clicked on ads that brought them to websites asking them to enter their cellphone numbers.
Some merchants tricked consumers into providing their cellphone numbers to receive “free” digital content and then charged for it. Many others simply placed fabricated charges on bills without delivering any goods or communicating with consumers.