National Mobile Cramming Settlements Now Total $353 Million…
FRANKFORT, Ky. (May 12, 2015) – Attorney General Jack Conway announced today that his Office of Consumer Protection Division — along with the Attorneys General of the other 49 States and the District of Columbia, the Consumer Financial Protection Bureau, and the Federal Communications Commission — reached settlements with Sprint Corporation (Sprint) and Cellco Partnership d/b/a Verizon Wireless (Verizon), that include $158 million in payments and resolve allegations that Sprint and Verizon placed charges for third-party services on consumers’ mobile telephone bills that were not authorized by the consumers, 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. The Attorneys General allege that cramming occurs when carriers place charges on consumers’ mobile telephone bills or deduct them from consumers’ prepaid accounts for third-party products without consumers’ knowledge and/or authorization.
Sprint and Verizon are the third and fourth mobile telephone providers to enter into nation-wide settlements to resolve allegations regarding cramming. Attorney General Conway announced similar settlements with AT&T in October of 2014 ($105 million), and T-Mobile in December of 2014 ($90 million). All four mobile carriers announced they would cease billing customers for commercial PSMS in the fall of 2013.
“These settlements will help protect Kentucky consumers from unauthorized third-party charges on their mobile telephone bills,” said Attorney General Conway said. “I encourage anyone who was affected by mobile cramming through Sprint or Verizon to submit a claim through the consumer redress programs required by these settlements.”
Under the terms of the settlements, Sprint will pay $68 million and Verizon will pay $90 million. Of these 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 under the supervision of the Consumer Financial Protection Bureau. Sprint will also pay $12 million to the Attorneys General and $6 million to the Federal Communications Commission, and Verizon will pay $16 million to the Attorneys General and $4 million to the Federal Communications Commission. Kentucky will receive $395,009.69 for its participation in the Sprint and Verizon settlements.
Consumers may submit claims under the redress programs by visiting www.SprintRefundPSMS.com (Sprint) or www.CFPBSettlementVerizon.com (Verizon). On those websites, consumers may 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 may visit the program websites or call the settlement administrators at: (877) 389-8787 (Sprint) 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 a large share of the mobile cramming problem. Under each of the four settlements, the carriers 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 for third-party charges, and must ensure that consumers are only charged for services if the they 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 the 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 carriers’ own charges, and must include information in that same section about the consumers’ ability to block third-party charges.
Considering these two settlements and the previously announced settlements with AT&T and T-Mobile, the national mobile cramming settlements with the four mobile carriers have called for refunds of about $290 million to consumers nationwide.
