Verizon Wireless will pay $90 million and Sprint will pay $68 million to settle investigations of bill cramming. The Federal Communications Commission said that both carriers billed customers millions of dollars for unauthorized third-party premium text messaging services.
Customers paid amounts ranging from 99 cents to $14 per month for services they did not authorize. The typical charge was $9.99 per month. According to the FCC, Verizon Wireless retained 30% or more of each third-party charge that it billed, while Sprint received approximately 35% of collected revenue for each of its third-party charges.
Consumers are getting $120 million from the two settlements. Verizon Wireless’ $90 million settlement will include a minimum of $70 million to fund a consumer redress program, $16 million for state governments participating in the settlement and $4 million as a fine paid to the U.S. Treasury. Sprint’s $68 million settlement will include a minimum of $50 million to fund a consumer redress program, $12 million for state governments participating in the settlement and $6 million as a fine paid to the U.S. Treasury.
Verizon Wireless and Sprint are the last of the four major U.S. carriers to agree to make payments to settle cramming allegations. AT&T Mobility agreed in October to pay $105 million, and T-Mobile US agreed to pay $90 million in December.
Carriers are now prohibited from directly offering third-party premium text services to customers. Third parties can offer these services, but carriers cannot bill for them without a customer’s explicit consent. Third-party charges must be clearly identified on bills, and consumers must be offered a free service that allows them to block all third-party charges on cellular phone bills.
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