Sprint and Verizon Wireless have followed AT&T and T-Mobile US by settling charges that they had billed customers for services, such as horoscopes and flirting tips, that they hadn’t ordered.
The practice is called cramming. It involves schemes in which other companies pushed unauthorized charges onto the wireless bills of customers by deceiving them or by feeding charges into the wireless companies’ billing systems.
Sprint agreed to pay $68 million and Verizon $90 million to settle the cramming claims, with most of the money going back to the carriers’ customers, New York Attorney General Eric Schneiderman said Tuesday. Refunds to consumers for the cramming charges will be overseen by the Consumer Financial Protection Bureau.
The payments resolve state and federal investigations into the practice. Missouri will get $187,758.90 from Sprint and $250,396.18 from Verizon. Kansas will get $203,281.81 from Sprint’s settlement and $152,443.05 from Verizon’s.
Kansas also has set up contact information online for consumers to submit claims against all four national carriers.
T-Mobile settled similar charges in December for $90 million, and AT&T settled in October for $105 million.
The consumer bureau sued Sprint a few days after T-Mobile settled. Its complaint said the Overland Park-based carrier had retained 40 percent of the revenue allegedly collected improperly from customers.
Sprint had defended its billing systems and said it was disappointed the federal consumer agency had sued.
In a statement Tuesday, Sprint said it is “an industry leader in enacting rigorous safeguards to protect customers against unauthorized billing” by the other companies. Sprint also said it had refunded “tens of millions of dollars” before the government investigated cramming in the industry.
U.S. wireless providers made hundreds of millions of dollars by taking cuts from fees billed to consumers for the extra services, the Federal Trade Commission maintained.
A common cramming charge is a $9.99-per-month text messaging subscription service for items such as horoscopes, trivia, sports scores or other information. All four mobile carriers said in 2013 that they would stop billing for those unrequested services.
“It’s both unfair and illegal to charge consumers for services they did not request, a practice that Sprint and Verizon engaged in over several years,” Schneiderman said.
In some instances, rather than being clearly broken out, the third party charges have been lumped under generic terms such as “usage charges” on customers’ bills, according to the FTC.