Sprint has agreed to pay a $2.95 million federal fine amid charges it failed to make needed disclosures on fees levied against many of its wireless customers.
The settlement with the Federal Trade Commission involved $7.99 monthly fees that the Overland Park-based company added to bills of customers with lower credit scores. Specifically, it applied when customers were placed in Sprint’s Account Spending Limit program because of information on their credit report, a statement from the FTC said.
“Sprint failed to give many consumers required information about why they were placed in a more costly program, and when they did, the notice often came too late for consumers to choose another mobile carrier,” Jessica Rich, director of the FTC’s bureau of consumer protection, said in the statement.
Notice sometimes came after the customer had become subject to early termination fees, the FTC said, and Sprint added a financial penalty if the customer decided to cancel because the fee had been applied based on an incorrect credit report.
Sprint, in the settlement, agreed to follow the Risk-Based Pricing Rule of the Fair Credit Reporting Act and to properly notify customers within five days of signing up for service or early enough that they can still cancel the service.
A statement from Sprint said the company “puts its customers first and is always working to provide clear and necessary information to customers.”
It said the specific rule involved, though set in 2011, is relatively new.
“The FTC agreed that we were including almost all of the relevant information in our ASL letters but requested that we modify the format of the letter. We appreciated the dialogue with the FTC and we have already implemented the changes requested by the FTC.”
The FTC said that Sprint, in charging the fees, had failed to provide all the required disclosures and left out other information customers needed to understand their credit reports that triggered the fees and that may have told the consumer information in the reports was wrong, the FTC said.
The FTC said Sprint’s disclosure violations ran from November 2013 through June 2014.
There were no provisions in the settlement for refunds to any customers assessed the fees or to allow affected customers to alter their service with Sprint.
Current customers who were not properly notified previously will receive correct disclosures under the settlement.