Cfpb Lawsuit: Sprint Made Millions Off Consumers Acting As A “breeding Ground” For Bill-cramming

(Spidra Webster) Just a day after rumors surfaced that Sprint could be facing a $105 million from the Federal Communications Commission for allegedly overcharging customers using a practice known as “bill-cramming,” the Consumer Financial Protection Bureau has filed a lawsuit against the carrier for the bogus charges placed on customer’s phone bills. The CFPB announced today that it has filed a lawsuit against Sprint Corporation for illegally billing wireless consumers tens of millions of dollars in unauthorized third-party charges. According to the Bureau’s complaint [PDF], which seeks refunds for affected consumers, Sprint operated a billing system that allowed third-party servicers to “cram” unauthorized charges on customers’ mobile-phone accounts and subsequently ignored consumers’ complaints about the charges. Like previous cramming allegations against T-Mobile and AT&T, Sprint allegedly tacked unasked-for and unauthorized subscriptions for things like ringtones and text messages containing love tips, horoscopes, and “fun facts” onto bills. From about 2004 through 2013, regulators say nearly all wireless carriers’ third-party billing involved products called “premium text messages” or “premium short messaging services” (PSMS) because they were frequently delivered by text messages. In Sprint’s case, the company outsourced payment processing for these digital purchases to vendors called “billing aggregators” without properly monitoring them. Because of the lack of oversight, regulators allege that Sprint’s system attracted and enabled unscrupulous merchants who, in some cases, only needed consumers’ phone numbers to cram illegitimate charges onto wireless bills. The charges typically ranged from one-time fees of about $0.99 – $4.99 to monthly subscriptions that cost about $9.99 a month. In all, the CFPB estimates that Sprint received a 30% to 40% cut of the gross revenue from these charges. The CFPB reports that most affected Sprint customers were initially targeted by the third-party products online. “Consumers clicked on ads that brought them to websites asking them to enter their cellphone numbers,” officials with the CFPB say in a news release.