Arizona will receive approximately $450,000 from national lawsuits against Sprint and Verizon. Attorneys General from 50 States and the District of Columbia, the Consumer Financial Protection Bureau, and the Federal Communications Commission, reached settlements with Sprint Corporation and Cellco Partnership DBA Verizon Wireless totaling $158 million.
The settlement resolves allegations that Sprint and Verizon placed unauthorized charges for third-party services on consumers’ mobile telephone bills, a practice known as “mobile cramming.”
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.
Sprint and Verizon are the third and fourth mobile telephone providers to enter into a nation-wide settlement to resolve allegations regarding cramming. Similar settlements were announced with AT&T in October of 2014 ($105 million) and T-Mobile in December of 2014 ($90 million). All four mobile carriers previously announced they would cease billing customers for commercial PSMS in the fall of 2013.
The bulk of the national settlement funds – about $120 million — will go toward consumer restitution programs administered by Verizon and Sprint under the supervision of the Consumer Financial Protection Bureau. In Arizona, it is estimated that approximately 496,000 Verizon accounts and roughly 216,000 to 269,000 Sprint accounts may be eligible for refunds. The amounts of the refunds will vary.
Consumers can submit claims under the restitution programs by visiting www.SprintRefundPSMS.com or www.CFPBSettlementVerizon.com. On those websites, consumers can submit claims, find information about refund eligibility and how to obtain a refund, and can request 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 announced today, like those 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 all 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 following:
• 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 charges can be blocked if the consumers do not want to use their phone to pay for third-party products; and
• 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.
Under these settlements, Verizon will pay a total of $90 million and Sprint a total of $68 million. Those figures include payments for consumer restitution programs (Verizon – $70 million; Sprint – $50 million), payments to the Federal Communications Commission (Verizon – $4 million; Sprint – $6 million), and payments to the Attorneys General (Verizon – $16 million; Sprint – $12 million). Arizona will receive $259,107 from Verizon and $194,289 from Sprint.
If you believe you have been a victim of mobile cramming or any other type of consumer fraud, you may file a consumer complaint at www.azag.gov (click “consumer,” then “file a complaint”). If you have questions or would like to request a complaint form by mail, please contact the Consumer Information & Complaints Unit at (602) 542-5763 (Phoenix), (520) 628-6504 (Tucson), or toll free outside metro Phoenix, (800) 352-8431.