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Verizon, Sprint agree to pay $158M settlement with FCC over 'cramming'
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MacNN Staff
Join Date: Jul 2012
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Sprint and Verizon have agreed to pay a fine from the Federal Communications Commission (FCC) for adding unwanted third-party charges to phone bills, a practice also known as " Cramming." The two carriers have agreed to pay $158 million to settle the charges, with Verizon paying the higher amount of $90 million, while Sprint will be charged $68 million.
Cramming usually consists of extra charges being added to the phone bill, but without being properly authorized. These typically stem from third-party premium text messaging services, costing between $1 and $14 but usually cost $10 per month. Verizon and Sprint collected 30 percent and 35 percent of the fee respectively, and though customers complained, refunds were usually not provided. When the complaints reached the FCC, the regulator asked for proof that they were authorized charges, something the carriers were unable to prove at all.
The new agreements follow similar earlier settlements by AT&T and T-Mobile over the same matter. In October last year, AT&T agreed to pay $105 million to settle with the FCC, while in December, T-Mobile settled for $90 million. The total amount of penalties for all four of the carriers for cramming now sits at $353 million, with $267.5 million of that figure expected to return to consumers.
Of Verizon's $90 million, at least $70 million will be used to fund a consumer redress program, with $16 million going to state government departments and a $4 million fine to the US Treasury. Sprint will have to spend $50 million for the redress program, $12 million to states, and $6 million to the Treasury. The Enforcement Bureau has also requested "strong consumer protections" be put in place to reform internal company processes and information disclosures, including clearer identification of third-party charges on bills, a free blocking service, and regular compliance reports provided to the FCC.
The FCC recommends current and former Sprint and Verizon wireless customers review their bills and contact their carrier if they believe cramming has occurred on their account.
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Last edited by NewsPoster; May 13, 2015 at 08:19 AM.
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Fresh-Faced Recruit
Join Date: Feb 2006
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I'd like to know how much these companies profited from cramming even after the penalties are subtracted. I bet it was still profitable, in which case it wasn't a sufficient penalty, and just part of the cost of doing business.
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Forum Regular
Join Date: Sep 2000
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And I wonder who's pocket these fines are going into...funny how people assume that the government is so noble compared to private citizens and corporations.
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Michael
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funny how some people assume corporations will do the right thing if only the big bad gummint just leaves them be.
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Fresh-Faced Recruit
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Funny how some assume the gummint is the answer for EVERYTHING, isfair and will do the right thing as well.
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Senior User
Join Date: Jan 2007
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The alternative was to just pay the bill? Move service to another cramming company? Some sort of invisible hand plan?
Seriously. Do you actually have a workable solution that doesn't involve the government?
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