Rutledge Announces Restitution for Victims of Sprint and Verizon Mobile Cramming
May 12, 2015
LITTLE ROCK – Arkansas Attorney General Leslie Rutledge today announced that she, along with 49 other state attorneys general, the District of Columbia, the Consumer Financial Protection Bureau (CFPB) and the Federal Communications Commission (FCC) have reached settlements with the Sprint Corp. and Cellco Partnership, also known as Verizon Wireless.
Under the terms of the settlements, Sprint will pay $68 million and Verizon will pay $90 million to resolve allegations that both companies placed charges for third-party services on consumers’ mobile telephone bills that were not authorized by the consumers, a practice commonly referred to as “mobile cramming.” Arkansas will receive $153,176 from Sprint and $204,260 from Verizon.
Of the settlement amounts, Sprint and Verizon are required to provide $50 million and $70 million, respectively, to consumers who were victims of cramming. Sprint and Verizon will each distribute refunds to harmed consumers through redress programs that will be under the supervision of the CFPB. Sprint will also pay $12 million to the attorneys general and $6 million to the FCC, and Verizon will pay $16 million to the attorneys general and $4 million to the FCC.
“In Arkansas, approximately 108,000 Sprint customers and approximately 211,500 Verizon customers will be eligible to receive restitution under this settlement,” said Attorney General Rutledge. “This settlement is an important victory for the current customers of Sprint and Verizon who can now seek restitution, but also a critical step in protecting current and future customers from being taken advantage of by these cramming charges.”
Consumers who have been “crammed” often have charges, typically $9.99 per month, for “premium” text message subscription services (also known as “PSMS” subscriptions) such as horoscopes, trivia, and sports scores that the consumers have never heard of or requested.
Consumers can submit claims under the redress programs by visiting SprintRefundPSMS.com and/or CFPBSettlementVerizon.com. These websites will provide information about refund eligibility, how to obtain a refund and offer guidance on requesting a free account summary that details PSMS purchases on their accounts. Consumers who have questions about the redress programs can visit the program websites or call the settlement administrators at (877) 389-8787 (Sprint), and/or (888) 726-7063 (Verizon).
The settlements, like the settlements entered into by AT&T and T-Mobile in late 2014, require Sprint and Verizon to stay out of the commercial PSMS business — the platform to which law enforcement agencies attribute the lion’s share of the mobile cramming problem. Under each of the four settlements, the carriers, including Sprint and Verizon, must also take a number of steps designed to ensure that they only bill consumers for third-party charges that have been authorized, including:
- The carriers must obtain consumers’ express consent before billing consumers for third-party charges, and must ensure that consumers are only charged for services if the consumers have been informed of all material terms and conditions of their payment.
- The carriers must give consumers an opportunity to obtain a full refund or credit when they are billed for unauthorized third-party charges.
- The carriers must inform their customers when they sign up for services that their mobile phone can be used to pay for third-party charges, and must inform consumers of how those third-party charges can be blocked if consumers do not want to use their phone to pay for third-party products.
- The carriers must present third-party charges in a dedicated section of consumers’ mobile phone bills, must clearly distinguish them from the carrier’s own charges, and must include in that same section information about the consumers’ ability to block third-party charges.