CHARLESTON — West Virginia Attorney General Patrick Morrisey and AGs in 49 other states, the District of Columbia and federal regulators, have reached a $159 million national settlement with Sprint Corp. and Verizon Wireless to resolve allegations that the companies allowed unauthorized charges for third-party services to be placed on consumers’ mobile telephone bills, a practice known as mobile cramming.
The two companies separately entered into assurances of discontinuance with the states and federal regulatory agencies. In the assurances, the companies agreed to stay out of premium text message subscription services, also known as PSMS subscriptions, and develop and implement a system so that consumers will not be unknowingly billed for products purchased.
“These settlements are a victory for West Virginia consumers who had extra charges for third-party products tacked on to their cell phone bills without the their permission,” Morrisey said. “Consumers need to know that the companies they are dealing with are acting fairly and taking all necessary steps to protect them from those who may try to be deceptive.”
Morrisey said consumers who have been “crammed” often complain about charges, typically $9.99 per month, for “premium” text message subscription services (also known as “PSMS” subscriptions) such as horoscopes, trivia, and sports scores, that the consumers have never heard of or requested. Morrisey, other attorneys general, and federal regulators alleged that cramming occurred when the mobile service providers placed charges on consumers’ mobile telephone bills without the consumers’ knowledge or consent.
Sprint agreed to pay $68 million to the states and federal regulatory agencies. Of that, up to $50 million must be paid to consumers — a portion of which may be paid by forgiving debts consumers may owe Sprint. Sprint also will pay $12 million to the attorneys general and $6 million to the Federal Communications Commission. West Virginia anticipates receiving $140,787.90 from Sprint.
Verizon agreed to pay $90 million to the states and federal regulatory agencies. Of that, up to $70 million must be paid to consumers — a portion of which may be paid by forgiving debts consumers may owe the communications company. Verizon also will pay $16 million to the attorneys general and $4 million to the Federal Communications Commission. West Virginia anticipates receiving $187,732.84.
Under the terms of the settlements, Sprint and Verizon must provide an opportunity for a full refund to each victim of cramming who files a claim under its Premium SMS Refund Program.
Sprint and Verizon are the third and fourth mobile telephone providers to enter into a nationwide settlement to resolve allegations of cramming. Last year, Morrisey and other attorneys general announced similar settlements with AT&T Mobility and T-Mobile, in which both companies agreed to recoup states and customers for unauthorized charges and to cease billing customers for commercial PSMS charges.
“Our Office has tried to take an aggressive stance when it comes to protecting consumers against telephone scams, cramming, and spoofing,” Morrisey said. “That is why our Office joined with 38 other states and territories in a letter last year urging the Federal Communications Commission to allow phone companies to utilize call-blocking technologies that would better protect consumers from unwanted calls and scams.
The settlement requires Sprint and Verizon to stay out of the commercial PSMS business — the platform to which law enforcement agencies attribute the lion’s share of the mobile cramming problem. Additional terms require both companies to take a number of steps designed to ensure they only bill consumers for third-party charges that have been authorized, including the following:
- Sprint and Verizon must obtain consumers’ express consent before billing consumers for third-party charges, and must ensure that consumers are only charged for services if the consumer has been informed of all material terms and conditions of their payment;
- Sprint and Verizon must provide a full refund or credit to consumers who are billed for unauthorized third-party charges at any time after this settlement;
- Sprint and Verizon must inform their customers when signing up for services that their mobile phone can be used to pay for third-party charges. The companies also must inform consumers of how third-party charges can be blocked if the consumer doesn’t want to use their phone as a payment method; and
- Sprint and Verizon must present third-party charges in a dedicated section of consumers’ mobile phone bills, must clearly distinguish them from Sprint and Verizon charges, and must include in that same section information about the consumers’ ability to block third-party charges.
Consumers can submit claims by visiting www.SprintRefundPSMS.com and/orwww.CFPBSettlementVerizon.com. On those websites, consumers can submit claims, find information about refund eligibility and how to obtain a refund, and can request a free account summary that details PSMS purchases on their accounts. Consumers who have questions about the redress programs can visit the program websites or call the settlement administrators at: 877-389-8787 (Sprint), and/or 888-726-7063 (Verizon).