Verizon Wireless will pay $90 million and Sprint $68 million to settle charges that the mobile giants allowed phony charges on their customers’ monthly bills so they could keep a cut of the profit, federal regulators announced Tuesday.
The two mobile providers had partnered with third-party vendors that sell premium text messaging services, such as daily horoscopes, trivia and sports scores. But consumers who hadn’t signed up for the services were being billed anyway, typically about $9.99 a month, according to the Federal Communications Commission, Federal Trade Commission and several state attorneys general. Regulators said they launched an investigation after receiving numerous complaints that the carriers had refused to refund the charges.
Both companies said in statements emailed to reporters on Tuesday that they had stopped allowing premium text messaging before the government investigation began. Sprint spokesman Jeffrey Silva said the company had already returned “tens of millions of dollars” to its customers.
“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,” Silva wrote.
Verizon Wireless spokeswoman Debra Lewis said the settlement “reflects Verizon’s continued focus on putting customers first.” She added that the company had “rigorously protected” its customers from unauthorized charges.
“Verizon thoroughly vetted the companies that provided these services and terminated providers who did not comply with our industry-leading practices,” Lewis wrote.
The FCC, FTC and other regulators cheered the move as a signal that the practice, known as “mobile cramming,” would no longer be tolerated.
“For too long, consumers have been charged on their phone bills for things they did not buy,” FCC Chairman Tom Wheeler said in a statement.
Most of the money paid by the providers will be used in large measure to refund duped consumers.
The settlement suggests that a practice known as “mobile cramming” was widely used by wireless providers. Last year, T-Mobile agreed to pay $90 million for cramming while AT&T Mobility agreed to a $105 million settlement.
According to the FCC, consumers who called the carriers to complain were denied a refund. But the carriers were unable to provide proof that the customer had authorized the charges.
Verizon Wireless said customers who believe they were billed improperly may seek a refund. They said they’ll set up a website where consumers can get more information.