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May 13, 2015

Verizon, Sprint to pay $158m to settle cramming allegations

The companies will also pay $38m in federal and state fines.

By CBR Staff Writer

Verizon Wireless and Sprint will pay a combined $158m to settle US government cramming allegations.

The Federal Communications Commission (FCC), the Consumer Financial Protection Bureau and attorneys general from across the US investigated the charges and negotiated settlements with the companies.

Verizon and Sprint will pay $90m and $68m, respectively, on charges that they operated billing systems that enabled third parties to cram unauthorised charges on customers’ mobile-phone accounts and ignored complaints about the charges.

The companies will also pay $38m in federal and state fines for unauthorised charges on customers’ mobile bills.

Of its settlement, Verizon will have to pay a minimum of $70m to fund a consumer redress programme, $16m in fines to state governments participating in the settlement and a $4m fine to the US Treasury.

Sprint is required to pay a minimum of $50m in payments to consumers, $12m in fines to state governments and a $6m fine to the US Treasury.

FCC chairman Tom Wheeler said: "For too long, consumers have been charged on their phone bills for things they did not buy.

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"We call these fraudulent charges ‘cramming,’ and with today’s agreements we are calling them history for Verizon and Sprint customers."

A Verizon spokesperson said the company had stopped allowing firms to place charges for premium text message services on customers’ bills well before any government action.

A Sprint spokesman said the company had already returned tens of millions of dollars prior to the government’s probe.

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