Phone Companies Resolve Illegal Billing Charges

Sprint and Verizon reached a $158 million settlement with federal and state regulators this week to resolve allegations that the two mobile telephone companies added third-party service charges to consumers’ telephone bills that were not authorized by consumers.

Verizon will pay a total of $90 million and Sprint will pay a total of $68 million. Broken down, Verizon and Sprint are required to provide $70 million and $50 million, respectively, to consumers who were victims of cramming. Verizon will pay $16 million total to all 50 states and $4 million to the Federal Communications Commission. Sprint will pay $12 million to the 50 states and $6 million to the FCC. 

Cramming involves third-party text messaging services that sell information such as horoscopes and trivia. The FCC claims some customers were charged for the texts despite never signing up for the services. Both companies said they stopped allowing the third-party text services before federal regulators launched their investigation and reiterated their focus on putting their customers first.

According to the FCC, the most common cramming charge is $9.99. Regulators recommend looking out for generic sounding fees. Some common words that may be used include: Min. Use Fee, Activation, Member Fee or Subscription.

Verizon has set up a website for customers to get more information.

"Verizon thoroughly vetted the companies that provided these services and terminated providers who did not comply with our industry-leading practices," company spokeswoman Debra Lewis said in a statement.

Jeffrey Silva, a Sprint spokesman, said in a statement, that the "settlement gives our customers who believe they were wrongfully billed for services the ability to get a refund and allows Sprint to continue to focus on enhancing the customer experience."

Sprint and Verizon are the third and fourth mobile telephone providers to enter into a nationwide settlement to resolve cramming allegations. The FCC announced similar settlements with AT&T for $105 million last October, and with T-Mobile for $90 million in December.

The FTC filed suit against T-Mobile in July, alleging the company placed millions of dollars in unwanted third-party charges on its customers’ mobile phone bills, receiving 35% to 40% of every charge they placed. The complaint alleged that in some cases, T-Mobile charged consumers for services that had refund rates of up to 40% in one month. 

According to that complaint, T-Mobile’s phone bills made it nearly impossible for consumers to find and understand third-party subscription charges. The FTC’s complaint against T-Mobile noted that in many instances information about the third-party charges crammed on to customers' bills was buried deep in phone bills that totaled more than 50 pages in length.