Sprint may have been overcharging its consumers to the tune of millions of dollars by cramming unauthorized charges onto its consumers’ bills. Haven’t we heard this before? Yes, in fact earlier this year, SKW attorney Brad J. Moore, also the President Elect of Public Justice (the country’s largest public interest law firm focused on consumer protection) obtained a $20 million class action settlement against Sprint PCS for illegal taxes.
Most recently, the Federal Communications Commission (FCC) and Consumer Financial Protection Bureau are targeting Sprint in an investigation for practices of illegally billing customers tens of millions of dollars for unauthorized charges related to premium text messages.
Just yesterday, the consumer bureau sued Sprint in Federal District Court in Manhattan. The lawsuit claims that Sprint has been operating a billing system that allows third parties to “cram” unauthorized charges onto consumers’ mobile phone bills.
On a parallel track, the F.C.C. is conducting a similar investigation. Sources reveal that a settlement where Sprint would pay $105 million in refunds/restitution is imminent.
“Consumers ended up paying tens of millions of dollars in unauthorized charges, even though many of them had no idea that third parties could even place charges on their bills,” said Richard Cordray, director of the consumer bureau. “As the use of mobile payments grows, we will continue to hold wireless carriers accountable for illegal third-party billing.”
In the past, the F.C.C., the Federal Trade Commission and state attorneys general have participated in lawsuits or settlements with AT&T and T-Mobile for similar alleged cramming charges. The practices under scrutiny typically focused on charges on customers’ bills for premium text messages, that came via horoscopes or other digital content.
The three major mobile companies have gotten hit with accusations of ignoring warning signs that many of the charges were unauthorized. Ignoring thousands of consumer complaints, these carriers blithely allowed third-party companies to assess the charges.
The action by the consumer bureau is a clear signal (again, no pun intended!) of its ongoing plans to police mobile payment systems (e.g., Apple Pay, Google Wallet, and others). Thank goodness for consumer protection groups and watchful agencies who are not entirely in the pockets of these mobile companies.