Verizon, Sprint to Pay Millions to Settle 'Cramming' Suits

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A Sprint store is pictured in the New York City borough of Manhattan, NY
By Alina Selyukh

WASHINGTON -- Verizon Communications (VZ) will pay $90 million and Sprint (S) will pay $68 million to settle U.S. government probes into unauthorized charges tacked onto their customers' phone bills, federal agencies said Tuesday.

The settlements are the latest in the government's push against the practice known as cramming, in which mobile carriers bill customers for services they never requested such as daily horoscopes or trivia.

The Federal Communications Commission, the Consumer Financial Protection Bureau and attorneys general from across the country investigated the charges and negotiated settlements with Verizon and Sprint, the No. 1 and No. 3 wireless providers.

"Well before any government action, Verizon Wireless stopped allowing companies to place charges for premium text message services on customers' bills," Verizon spokesman Ed McFadden said in a statement.

Sprint spokesman Jeff Silva said the company had already refunded customers tens of millions of dollars before the government's investigation.

The companies joined national carriers AT&T (T) and T-Mobile US (TMUS) in agreeing to pay fines and refund consumers for such practices.

Last year, AT&T paid $105 million and T-Mobile paid $90 million to settle a similar probe by the FCC, the Federal Trade Commission and state attorneys general.

The regulators said Tuesday that the companies had charged consumers for subscriptions to third-party products such as daily humor or celebrity gossip services, typically charging consumers $9.99 a month and taking a cut of up to 40 percent.

Consumers who called to complain were often refused a refund, the FCC said, even though government investigators couldn't find proof the services had been requested.
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