Sprint, Verizon To Pay $158 Million For Fraudulent Billings

(RTTNews) - US mobile operators Sprint Corp. (S) and Verizon Communications, Inc. (VZ) will pay a combined $158 million to settle investigation related to wrongly billing their customers for unauthorized third-party premium text messaging services.

Verizon Wireless will pay $90 million and Sprint will pay $68 million to settle the probe. The major enforcement actions will provide current and former customers with refunds of the charges.

"For too long, consumers have been charged on their phone bills for things they did not buy. We call these fraudulent charges 'cramming,' and with today's agreements we are calling them history for Verizon and Sprint customers," FCC Chairman Tom Wheeler said.

Verizon's settlement includes a minimum of $70 million to fund a consumer redress program, $16 million for state governments participating in the settlement, and $4 million as a fine paid to the U.S. Treasury.

Meanwhile, Sprint's settlement will include a minimum of $50 million to fund a consumer redress program, $12 million for state governments participating in the settlement, and $6 million as a fine paid to the U.S. Treasury.

The FCC said the placement of unauthorized charges and fees on consumers' telephone bills is an "unjust and unreasonable" practice that is unlawful under the Communications Act.

"Consumers rightfully expect their monthly phone bills will reflect only those services that they've purchased. Today's settlements put in place strong protections that will prevent consumers from being victimized by these kinds of practices in the future," said Travis LeBlanc, Chief of the FCC's Enforcement Bureau.

The FCC noted that it worked together with the Consumer Financial Protection Bureau, the Federal Trade Commission, and attorneys general of all 50 states and the District of Columbia to refund a total of $267.5 million to affected customers to date.

They have already slapped a total of $353 million in penalties and restitution recently against the U.S.'s four largest wireless carriers for these 'cramming' charges.

Since January 2014, the FCC has taken 19 enforcement actions totaling $391 million for cramming violations, including $105 million against AT&T Mobility in October 2014, and $90 million against T-Mobile USA, Inc. in December 2014.