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May 11, 2015

Iowans to Receive Refunds through Joint State-Federal $158 Million "Mobile Cramming" Settlement with Sprint & Verizon

Settlements stop unauthorized charges, follow previous settlements with AT&T and T-Mobile; settlements now cover nation’s four largest carriers

(DES MOINES, Iowa) Sprint and Verizon Wireless, two of the nation’s three largest wireless carriers, will offer refunds to harmed customers through a combined $158 million joint state-federal settlement over allegations the companies engaged in “mobile cramming,” or placing unauthorized charges on consumers’ mobile phone bills.

Attorney General Tom Miller joined attorneys general of all 50 states and the District of Columbia, the Consumer Financial Protection Bureau (CFPB), and the Federal Communications Commission (FCC) in settlements with Sprint Corporation and Cellco Partnership d/b/a Verizon Wireless. The companies will make combined payments of $360,000 to the attorney general’s consumer education and litigation fund.

Consumers who have been “crammed” often have charges, typically $9.99 per month, for “premium” text message subscription services (also known as Premium Short Message Service, or PSMS subscriptions) such as horoscopes, trivia, and sports scores that the consumers have never heard of or requested.

Sprint and Verizon are the third and fourth mobile telephone providers to enter into a nation-wide settlement to resolve allegations regarding cramming. Miller and state attorneys general reached similar settlements with AT&T, the nation’s second-largest carrier, in October of 2014 ($105 million), and T-Mobile, the nation’s fourth-largest carrier, in December of 2014 ($90 million). All four mobile carriers announced they would cease billing customers for commercial PSMS in the fall of 2013.

“These two settlements, which follow two previous settlements, mean customers of the four largest wireless carriers who were forced to pay crammed charges qualify for payments,” Miller said. “And we’ve ended the practice that cost consumers for services they didn’t want and didn’t use.”

Under the terms of the settlements, Sprint will pay $68 million and Verizon will pay $90 million. Of these amounts:

  • Sprint and Verizon will provide $50 million and $70 million, respectively, to consumers who were victims of cramming. Sprint and Verizon will each distribute refunds to eligible consumers through redress programs that will be under the supervision of the CFPB.
  • Sprint will pay $12 million to the state attorneys general, including more than $206,000 to Iowa, and $6 million to the FCC.
  • Verizon will pay $16 million to the attorneys general, including more than $154,000 to Iowa, and $4 million to the FCC.

The settlements, like the AT&T and T-Mobile settlements, require Sprint and Verizon to stay out of the commercial PSMS business—the platform to which law enforcement agencies attribute the lion’s share of the mobile cramming problem.

The four carriers must also take steps designed to ensure that they only bill consumers for third-party charges that they authorized, including the following:

  • The carriers must obtain consumers’ express consent before billing consumers for third-party charges. The carriers must further ensure that consumers are only charged for services if the consumers have been informed of all material terms and conditions of their payment.
  • The carriers must give consumers an opportunity to obtain a full refund or credit when they are billed for unauthorized third-party charges.
  • The carriers must inform their customers when they sign up for services that their mobile phone can be used to pay for third-party charges, and must inform consumers of how those third-party charges can be blocked if the consumers do not want to use their phone to pay for third-party products.
  • The carriers must present third-party charges in a dedicated section of consumers’ mobile phone bills, must clearly distinguish them from the carrier’s own charges, and must include in that same section information about the consumers’ ability to block third-party charges.

Consumers can submit claims under the redress programs by visiting www.SprintRefundPSMS.com and/or www.CFPBSettlementVerizon.com. On those websites, consumers can submit claims, find information about refund eligibility and how to obtain a refund, and can request a free account summary that details PSMS purchases on their accounts.

Consumers with questions can find information on the program websites or call the settlement administrators. Sprint: (877) 389-8787; Verizon: (888) 726-7063.

The claim deadline for the Sprint and Verizon settlements is December 31. The claim deadline for the previously announced T-Mobile settlement is June 30. The deadline for the previously announced AT&T settlement has passed.

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