Attorney General DeWine Announces $158 Million mobile cramming settlements with Verizon and Sprint

Ohio Attorney General Mike DeWine, along with the attorneys general of the other 49 states and the District of Columbia, the Federal Communications Commission, and the Consumer Financial Protection Bureau, announced national settlements with Verizon and Sprint to resolve allegations that the companies placed unauthorized third-party charges on consumers’ cell phone bills in a practice known as “mobile cramming.”

Under the settlements, which are estimated to affect hundreds of thousands of Ohioans, Verizon and Sprint
will pay a total of $158 million, most of which will be used to reimburse consumers.

The settlements are the latest in a nationwide effort by the attorneys general of all 50 states and the District of Columbia, the Consumer Financial Protection Bureau, the Federal Communications Commission, and the Federal Trade Commission to hold the major national cell phone companies accountable for placing unauthorized charges for third-party services on consumers’ mobile telephone bills through cramming.

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

“If your cell phone bill was higher than expected in the last few years, cramming could be to blame,” Attorney General DeWine said. “Under these settlements, consumers will receive money back for unauthorized charges, and the cell phone carriers will have to take a number of specific steps to ensure that this doesn’t happen again.”

Sprint and Verizon are the third and fourth mobile telephone providers to enter into nationwide settlements to resolve cramming allegations. Attorney General DeWine announced similar settlements with AT&T in October 2014 ($105 million) and T-Mobile in December 2014 ($90 million). All four mobile carriers announced they would cease billing customers for commercial premium text message subscription services in the fall of 2013, after the states began investigating the carriers’ practices.

Under the terms of the settlements announced today, Verizon will pay $90 million and Sprint will pay $68 million. Sprint and Verizon each will distribute refunds to harmed consumers through redress programs that will be under the supervision of the Consumer Financial Protection Bureau.

Details about the settlement payments and consumer claims are outlined below.

Verizon settlement ($90 million total payment):
$70 million for consumer restitution
$16 million for the attorneys general ($333,052.17 for Ohio)
$4 million for the Federal Communications Commission
Website to submit claims: www.CFPBSettlementVerizon.com

Sprint settlement ($68 million total payment):
$50 million for consumer restitution
$12 million for the attorneys general ($249,715.92 for Ohio)
$6 million for the Federal Communications Commission
Website to submit claims: www.SprintRefundPSMS.com

On the websites where consumers can submit claims, they also can find information about refund eligibility, learn how to obtain a refund, and request a free account summary that details PSMS purchases on their accounts. Consumers who have questions about the redress programs can visit the program websites or call 888-726-7063 (Verizon) or 877-389-8787 (Sprint).

The settlements, like the settlements entered into by AT&T and T-Mobile in late 2014, 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.

Under each of the four settlements, the carriers also must take a number of steps designed to ensure that they only bill consumers for third-party charges that have been authorized. Among the steps the carriers must take are the following:

• The carriers must obtain consumers’ express consent before billing consumers for third-party charges, and must 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; and
• 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 who suspect an unfair business practice should contact the Ohio Attorney General’s Office at www.OhioAttorneyGeneral.gov or 800-282-0515.