US mobile operators Sprint and Verizon will pay out a combined $158m after the feds ruled that they allowed advertisers to tack unwanted premium charges onto customers’ bills.
According to the FCC, the carriers looked the other way when dodgy companies signed customers up for services without warning them that would be billed recurring monthly charges.
Under the terms of the deal, Sprint will pay $68m in fines, while Verizon will cough $90m. Those figures will include $50m and $70m in consumer refunds, respectively.
The shady offerings – often advertised as offering horoscope readings or “life predictions” – hid the fact that they were subscription services that were billed as monthly recurring charges. A portion of the charges were kicked back to the telcos – 35 per cent in Sprint’s case and 30 per cent for Verizon – which is why they are being held culpable.
“Consumers rightfully expect their monthly phone bills will reflect only those services that they’ve purchased,” said FCC enforcement chief Travis LeBlanc. “Today’s settlements put in place strong protections that will prevent consumers from being victimized by these kinds of practices in the future.”
How strong a message the current fines will send, however, is unclear. Verizon’s $90m fine will hardly make a dent in its pocketbook, having reported a hefty $4.3bn in net income in its most recent financial quarter alone.
Verizon and Sprint are not the first to be fined for their cooperation with cramming outfits. T-Mobile was hit with $90m in fines in December 2014 for allowing the practice, and AT&T was fined $105m in October. ®