CFPB Sues Sprint for ‘Cramming’ by Carrier Billers
Dec. 18, 2014
Carrier billing in the U.S. took another hit yesterday when the Consumer Financial Protection Bureau filed suit against Sprint alleging the company participated in the unlawful practice known as “cramming.” When Sprint customers purchased digital products like ringtones and wallpaper and had the charges added to their phone bill, the CFPB alleges, their customers were unknowingly enrolled in a third-party billing system that resulted in unscrupulous merchants adding unauthorized charges to their phone bills. Many times, according to CFPB Director Richard Cordray, consumers were tricked into providing their mobile numbers to get “free” content while surfing the Web only to be subject to unauthorized fees and monthly subscriptions.
“Despite complaints from consumers and other red flags, Sprint continued to outsource its third-party billing and allowed the unauthorized charges to pile up,” Cordray said in a news conference yesterday. “When consumers paid off these illegal charges, Sprint itself took a 30 to 40 percent cut of the gross revenue.”
The Federal Communications Commission is also investigating Sprint over these allegations. Similar suits have been brought by the FCC, the FTC and attorneys general in several states against AT&T and T-Mobile. In October, AT&T settled its case with the FTC for $105 million.
A Sprint spokesperson issued a statement in response: “We are disappointed that the CFPB has decided to target Sprint on this issue, and we strongly disagree with its characterization of our business practices. Sprint took considerable steps to protect wireless customers from unauthorized third-party billing and is an industry leader in proactively preventing unauthorized charges.”