Business

$158M Settlement Reached in ‘Mobile Cramming’ Case

May 12, 2015, 1:01 PM HST
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Sprint and Verizon, the third and fourth telephone providers to enter into a nation-wide settlement to resolve allegations regarding cramming, have been ordered to pay $158 million in payments and resolve allegations. The legal action follows unauthorized third-party services being placed on consumers’ mobile telephone bills, a practice known as “mobile cramming.”

The Department of Commerce and Consumer Affairs’ Office of Consumer Protection, along with the Attorney General of Hawai’i, the 49 other States and the District of Columbia, the Consumer Financial Protection Bureau, and the Federal Communications Commission reached the settlement with Sprint Corporation and Cellco Partnership dba Verizon Wireless. The OCP announced a $105 million settlement with AT&T in October 2013 and a $90 million settlement with T-Mobile in December 2014.

OCP Enforcement Attorney Landon M. M. Murata represented the State of Hawai’i in the case.

In fall 2013, all four of the mobile carriers has announced that they would cease billing customers for commercial “PSMS” subscriptions. These subscription are typical $9.99 per month charges for premium text message subscription services that consumers had not ordered or heard of. The services varied from horoscopes to trivia and sport scores.

“No consumer should have to pay for something that they never ordered,” said Stephen Levins, executive director of the Office of Consumer Protection. “This settlement is significant, because it corrects and industry practice that facilitated the improper posting of charged to consumers’ phone bills.”

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Sprint, under the terms of the settlement, will pay $68 million and Verizon will pay $90 million. Of the order, Sprint is required to pay $50 million to consumers who were victims of cramming and Verizon has been ordered to pay $70 million to victims of the cramming. The remainder of the money will be paid to the Attorney General and the FCC.

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Consumers who believe they were victims of mobile cramming can visit the Sprint Settlement website or the Verizon Settlement website to submit a claim and find out information about refund eligibility and how to obtain a refund. Those who are uncertain if they were affected can request a free account summary that details PSMS purchases on their accounts.

Those who have additional questions can call Sprint at (877) 383-8787 or Verizon at (888) 726-7063.

For its participation in the Sprint and Verizon settlements, the State of Hawai’i received $316,739.24. In total through the four national mobile cramming settlements, the state has received $747, 371.18.

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