Sprint is about to be fined $105 million by the Federal Communications Commission to penalize the company for allegedly "cramming" customer wireless telephone bills with unauthorized charges that engorged the company's earnings.
The pending fine against Sprint was reported in a Dec. 15 article by The National Journal, based on interviews with officials who requested anonymity.
The fine, which has not yet officially been announced by the FCC, would equal the $105 million bill cramming fine that the agency levied in October against AT&T Mobility for similar behavior, according to an earlier eWEEK report. In the AT&T case, the fine came after investigations by the FCC and the Federal Trade Commission found that AT&T had illegally crammed customer cell phone bills with extra, unauthorized charges and then refused to adequately remove the charges when users complained. That $105 million fine included $80 million for direct refunds to customers as well as $25 million in penalties to be paid to the FCC, the Federal Trade Commission and to attorneys general across the United States. It was the largest fine in the history of the FCC, according to the agency.
In the FCC's case against Sprint, which has not been finalized, similar charges allege that the company billed customers for services without authorization, according to The National Journal report.
"All five FCC commissioners are reviewing the proposed fine, but they haven't voted to take action yet," agency officials told the Journal. "It's unclear whether Sprint and the FCC are still engaged in settlement talks."
Neil Grace, a spokesman for the FCC, declined to comment on the matter when reached by eWEEK on Dec. 17.
In a related action, the FCC's partner agency, the Consumer Financial Protection Bureau (CFPB), filed a lawsuit on Dec. 17 against Sprint over the alleged cramming actions. "The bureau's complaint alleges that Sprint operated a billing system that allowed third parties to 'cram' unauthorized charges on customers' mobile-phone accounts and ignored complaints about the charges," the agency said in a statement. The CFPB said it is seeking refunds for affected consumers and penalties to deter such unauthorized third-party charges in the future.
"Today we are suing Sprint for allowing illegal charges to be crammed onto consumers' wireless bills," Richard Cordray, the director of the CFPB, said in a statement. "Consumers ended up paying tens of millions of dollars in unauthorized charges, even though many of them had no idea that third parties could even place charges on their bills. As the use of mobile payments grows, we will continue to hold wireless carriers accountable for illegal third-party billing."
The CFPB lawsuit was lauded by an unnamed FCC spokesman who said that it is a team effort that has been working to fight bill cramming issues when they arise. "The [FCC] has a great working relationship with CFPB and state law enforcement partners," the spokesman said in a statement. "Together, we are pursuing joint enforcement actions to protect consumers from unauthorized fees on their wireless bills. Our agencies have agreed to continue our close cooperation on this and other cases on behalf of wireless customers nationwide."
In the earlier case against AT&T, consumers had been reporting incidents to the FCC about the bill-cramming practices for years, which resulted in extra charges that had never been authorized by cell phone customers. Most of the charges were for $9.99 monthly fees for extra services, such as horoscope text messaging, celebrity gossip, fun facts or other third-party content that was provided by companies outside AT&T. The charges were posted on cell phone bills, however, under listings for AT&T services, according to the FCC.
In a separate action on Dec. 17, the FCC proposed a $3.56 million fine against Consumer Telcom (CTI) for bill cramming, deceptive marketing practices and for changing consumers' preferred long distance carriers without their authorization, according to the agency.