Sprint's Cramming Settlement to Cost $50 Million

A settlement was signed by a District Judge on Tuesday between the Consumer Financial Protection Bureau (CFPB) and Sprint Corp ordering the mobile provider to restitute fees that were wrongfully charged to customer’s monthly bills. This settlement is another piece of the larger epidemic of cramming, where mobile carriers charge unwarranted fees for premium text message services from third party services, such as horoscopes. Recent government probes have led to lawsuits against four of the country’s largest mobile carriers within the span of two years. AT&T and T-Mobile agreed to settle their suits, paying respective amounts of $105 million and $90 million in 2014.

U.S. District Judge William Pauley in New York signed off on the settlement just a month after demanding each party offer additional evidence proving adequate restitution, noting the information initially provided by each party offered minimal detail. The settlement signed had the same outline as the proposed deal in May, wherein each carrier will pay a large sum, with the majority allocated to repay consumers. Sprint has been ordered to pay $68 million, with $50 million to be allocated to refunding customers and the remaining $18 to close government investigations. Verizon has settled on $90 million, allocating $70 million to it’s customers.

A Sprint spokeswoman was not immediately available for a statement after Tuesday’s ruling; however, in a statement from May, Sprint spokesman Jeffrey Silva stated, “This settlement gives our customers who believe they were wrongfully billed for (premium text messaging) services the ability to get a refund, and allows Sprint to continue to focus on enhancing the customer experience.” A CFPB spokeswoman declined to comment.

Both companies have stated they discontinued cramming services before federal regulators launched their investigations and reiterated their primary focus has always been on customer satisfaction. Some carriers offer a feature that blocks third party services on customers’ phone bills, allowing customers additional protection from company malpractice. According to the FCC, the most common cramming fees are typically generic sounding such as: Min. Use Fee, Subscription, Member Fee or Activation and the charge fee tends to be $9.99. Both Sprint and Verizon have developed designated websites for customers to file requests for refunds.