Verizon, Sprint settle 'cramming' allegations for $158 million

Verizon and Sprint have agreed to pay regulators a total of $158 million for allegedly over-charging customers for apps, games, music and other premium content they did not intend to purchase.  

The Federal Communications Commission and the Consumer Financial Protection Bureau on Tuesday settled with Verizon for $90 million. Sprint settled for $68 million. 

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“For too long, consumers have been charged on their phone bills for things they did not buy,” FCC Chairman Tom Wheeler said in a statement. “We call these fraudulent charges ‘cramming,’ and with today’s agreements we are calling them history for Verizon and Sprint customers.”

A large portions of the money — $120 million — will go back to consumers. Another $28 million will go to state governments participating in the settlement. A fine of $10 million will go to the U.S. Treasury. 

All four of the largest U.S. wireless companies have now been fined over what regulators call "cramming," which was prevalent for about a decade up until 2013. In October, AT&T was fined $105 million, while T-Mobile was fined $90 million in December. 

Sprint and Verizon outsourced their payment processing for third-party premium text messages, which include various products like apps, games and other things. But the wireless companies are accused of not properly monitoring their payment processors. 

According to regulators, the hands-off approach resulted in "unscrupulous merchants" who could easily add charges to people's phone bills for products they did not intend to purchase. 

The charges would eventually show up on phone bills issued by Verizon and Sprint, which took 30 percent to 40 percent of the revenue from the crammed charges. Many times, the wireless companies denied refunds when customers complained, according to regulators.  

Customers could be tricked into buying content by clicking on online ads or passing along their phone number in exchange for what was advertised as free content. 

"Many others simply placed fabricated charges on bills without delivering any goods or communicating with consumers," the Consumer Financial Protection Bureau said.