American telecom regulator Federal Communications Commission (FCC) is likely to penalize Sprint for $105 million due to alleged forged billing.
This follows a complaint from the U.S. Consumer Financial Protection Bureau that filed a lawsuit against Sprint Corp over unauthorized charges on customers’ mobile phone bills.
“Sprint mistreated consumers egregiously by creating a billing system that invited illegal third-party charges and processed them in a highly irresponsible manner,” said CFPB’s director, Richard Cordray, on Wednesday.
“We strongly disagree with the CFPB’s characterization of our business practices,” said Sprint spokeswoman Stephanie Vinge Walsh in a statement.
FCC did not confirm about the $105 million penalty. FCC spokespeople said the FCC and the CFPB have agreed to continue close cooperation on this and other cases on behalf of wireless customers nationwide.
Sprint, a subsidiary of SoftBank of Japan, has received nearly 35,000 wireless customer complaints because of unsolicited charges for text message alerts, sports scores, horoscopes, ring tones and other unwanted services – during August to October 2013.
These customers had not signed up for these paid services from the third-largest U.S. cellphone carrier or authorized any such payments. Sprint has allegedly charged them under these services, without any prior knowledge to these wireless subscribers.
Federal regulators are accusing Sprint of illegally billing its wireless customers, a practice known as cramming. FCC says Sprint failed to oversee third-party companies, allowing illegal charges to be put on customers’ bills.
Over a decade, consumers were charged for items like cellphone ringtones or horoscope text messages they didn’t want and didn’t sign up for, the regulators said.
CFPB Director Richard Cordray said: “Because Sprint profited from the billing system, receiving up to 40 percent of the revenue from the charges, there was little incentive for Sprint to put a stop to them.”
Sprint, based in Overland Park, Kansas, said it took considerable steps to protect customers from unauthorized third-party billing and is an industry leader in proactively preventing unauthorized charges. “We consistently have encouraged any customers who think they may have incurred an unauthorized third-party charge on their phone bill to contact Sprint to resolve the issue,” said Sprint.
Reuters reported that Verizon Communications is the only nationwide wireless carrier that so far has not been subject to government actions over cramming. The FCC’s investigation of T-Mobile US is ongoing.
Verizon, AT&T, Sprint and T-Mobile last year agreed to stop billing customers for third-party services.
In October, the FTC won a $105 million settlement from AT&T Mobility. The settlement included $80 million in refunds to customers.
