Federal judge puts Sprint’s $68 million cramming settlement on hold

A federal judge has put a legal “wait one minute” on the $68 million settlement between Sprint and the Consumer Financial Protection Bureau.

Sprint agreed to pay that much to resolve charges from the federal agency that focused on cramming, which is the practice of billing customers for services, such as horoscopes and flirting tips, that they hadn’t ordered.

The agency made the charges and asked for court approval of the settlement.

“How the bureau believes a judge can evaluate the proposed settlement with a one-sentence joint motion, no memorandum of law, and no declarations, eludes this court,” U.S. District Judge William H. Pauley III wrote in a brief order Tuesday.

The consumer bureau sued Sprint in U.S. District Court in the southern district of New York. Pauley ordered both sides to file documents that explain “why this proposed settlement is fair, reasonable and does not disserve the public interest.”

Reuters reported that a Sprint spokeswoman said the company would address the judge’s order and that the agency would file a response to the order.

AT&T, Verizon and T-Mobile have reached similar settlements of cramming charges.

Wireless companies routinely add charges to customers’ bills to collect payments for products and services their customers buy from other companies. These can be games, apps, movies, books and music.

Cramming involves schemes in which other companies push unauthorized charges onto phone bills by deceiving consumers or by simply feeding them into the wireless companies’ billing systems.

Such charges were rampant in the industry from 2004 to 2013 and typically involved “flirting tips, horoscopes and other digital content” delivered through premium text messages to customers’ phones, the lawsuit said. The lawsuit said Sprint retained 40 percent of the revenues it allegedly collected improperly from customers on behalf of cramming companies.

This story was originally published May 19, 2015 at 7:09 PM with the headline "Federal judge puts Sprint’s $68 million cramming settlement on hold."