The Federal Communications Commission is taking Sprint and Verizon to task for billing practices that hid extra charges in customers’ bills.
On Tuesday the agency ordered the carriers to pay settlements totaling more than $150 million for billing customers for third-party texting services, without their knowledge. Verizon will have to cough up a total of $90 million while Sprint will have to pay $68 million in fines.
Of the $158 million, $120 million will go toward a customer redress program to pay back subscribers who were charged as a result of premium texting services they didn’t sign up for for. This practice, known as “cramming,” added as much as $14 per month to people’s bills, with Verizon and Sprint pocketing 30% and 35% of the revenue.
The FCC received complaints from “numerous consumers” whose carriers often refused to refund the additional charges, according to the agency. When the FCC asked for proof that these customers approved the charges, Verizon and Sprint were unable to provide any, the agency said.
“Consumers rightfully expect their monthly phone bills will reflect only those services that they’ve purchased,” Travis LeBlanc, chief of the FCC’s Enforcement Bureau, said in a statement. “Today’s settlements put in place strong protections that will prevent consumers from being victimized by these kinds of practices in the future.”
The FCC’s Enforcement Bureau is also introducing new stricter regulations around these premium texting services. Carriers must “offer a free service for customers to block all third-party charges.” The companies are also required to get consent from customers before charges appear on their bill and clearly mark charges from third-party services.
Tuesday’s settlement with Verizon and Sprint follows similar findings last year against AT&T and T-Mobile, which were fined for $105 million and $90 million respectively, for similar cramming practices.
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