Sprint Pays $50 Million in Cramming Fines

Sprint Pays $50 Million in Cramming Fines

Posted By Golomb & Honik, P.C. || 27-Sep-2015

In early July, a U.S. judge approved a $50 million settlement between Sprint and the Consumer Financial Protection Bureau. This settlement is part of a broader settlement regarding allegations Sprint billed customers for services they neither wanted, nor approved. In May, 2015, Sprint agreed to pay a total amount of $68 million in order to settle complaints regarding “cramming.” Cramming occurs when small charges are added to a consumer’s bill without consent or disclosure, and is a form of fraud.

How Cramming Charges are Disguised

The cramming charges are typically disguised as a type of tax or fee, and can range from a few cents to several dollars. Some of the cramming fees were for a horoscope service or for “fun facts”. According to the FCC, cramming fees are disguised by calling them a “min. use fee,” a “subscription,” a “member fee,” or “activation.” The company who engages in cramming is banking on the fact that the consumer will simply overlook the charges and pay them. In 2007, cramming was the fourth most common complaint from consumers and occurs most often on cell phone or home phone bills.

Judge Requires More Information Prior to Signing Off on May Settlement Agreement

When Sprint agreed to the $68 million settlement in May, U.S. District Judge William Pauley required more evidence that the deal was fair for all those involved before he would sign off on it. In fact, Judge Pauley noted the information initially provided in the settlement agreement offered minimal detail. In a separate deal, Verizon agreed to pay $90 million in a settlement over similar cramming accusations and AT&T agreed to pay $105 million. Consumers harmed by Sprint’s cramming practices will receive refunds from the $50 million, while $18 million will go to state governments and fines to U.S. Treasury.

Consumers Who Challenged Cramming Funds Were Denied Refunds

Most of the consumers who noticed the cramming charges in the past and attempted to challenge them were denied refunds, despite the fact the carriers were unable to show the charges were authorized. Both Sprint and Verizon have been ordered to cease offering third-party messaging services without consumer agreement. Not only must they ask the consumer for consent on any third-party charge, those charges must be clearly labeled on the customer’s monthly bill and the customer must be able to block any unauthorized charges. From this point on, Sprint and Verizon will be required to submit regular reports to the FCC in order to show they are paying the required refunds and complying with the orders of the agreement.

Submitting a Claim for Cramming Charge Refund

Both Sprint and Verizon say they put a halt to cramming services before the federal investigations began, claiming their primary focus is on customer service. According to the settlement agreement, the $50 million designated for consumer refunds encompasses a full ten years of cramming on the part of Sprint. Sprint has developed a designated website which allows customers to file requests for refunds.

If you submit a claim to Sprint for cramming charges, don’t hold your breath waiting for your refund. Customers have until December 31, 2015 to file for a refund for any charges billed since July 1, 2010, and it is unclear when the refunds will be issued. Some companies offer consumer protection websites which help consumers detect cramming as soon as it happens. These websites also help customers to generally better understand their monthly phone bill.

Contact Us

If you believe your wireless provider has placed unauthorized charges on your monthly bill, or you would like further information concerning this investigation, contact the consumer protection lawyers at Golomb & Honik today. We will review your claim to determine if you, too, have been a victim of cramming.

Schedule a free consultation call the Philadelphia class action lawyers at Golomb & Honik today at (215) 278-4449 or fill out our confidential contact form.

The national consumer class action lawyers at Golomb & Honik have successfully represented individuals in Philadelphia, Pennsylvania, New Jersey, and throughout the United States.

Categories: Class Action
Blog Home