HERRING ANNOUNCES $158 MILLION IN MOBILE "CRAMMING" SETTLEMENTS WITH SPRINT AND VERIZON

~ National mobile cramming settlements now total $353 million ~

RICHMOND (May 12, 2015)--Attorney General Mark R. Herring announced today that he-along with the attorneys general of the other 49 States and the District of Columbia, the Consumer Financial Protection Bureau, and the Federal Communications Commission-reached settlements with Sprint and Verizon Wireless that include $158 million in payments to resolve allegations that Sprint and Verizon placed unauthorized, third-party charges on consumers' mobile telephone bills, a practice known as "mobile 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 have never heard of or requested. Sprint and Verizon are the third and fourth mobile telephone providers to enter into nationwide settlements to resolve allegations regarding cramming. Attorney General Herring announced similar settlements with AT&T in October of 2014 ($105 million), and T-Mobile in December of 2014 ($90 million). All four mobile carriers announced they would cease billing customers for commercial PSMS in the fall of 2013.

"The settlements provide meaningful relief for victims of these deceptive cramming practices, and will help put an end to this conduct," Attorney General Herring said. "These are the third and fourth settlements we've reached to end this conduct and directly compensate Virginia consumers. My Consumer Protection team is working hard every day on behalf of Virginia consumers, and I encourage Virginians to reach out if they need our assistance on any matter, large or small."

 

Under the terms of the settlements, Sprint will pay $68 million, and Verizon will pay $90 million. Of these amounts, Sprint will provide $50 million and Verizon will provide $70 million, directly to consumers who were victims of cramming. Sprint and Verizon will each distribute refunds to harmed consumers through redress programs that will be supervised by the Consumer Financial Protection Bureau. 

Consumers can submit claims under the redress programs by visiting www.SprintRefundPSMS.com and/or www.CFPBSettlementVerizon.com. On those websites, consumers can submit claims, find information about refund eligibility and how to obtain a refund, and can 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 the settlement administrators at: (877) 389-8787 (Sprint), and/or (888) 726-7063 (Verizon). 

The settlements, like those 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, including Sprint and Verizon, must also take a number of steps designed to ensure that they only bill consumers for third-party charges that have been authorized, including 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.

As reimbursement for attorneys' fees and costs, Sprint will pay $12 million to the state attorneys general and $6 million to the Federal Communications Commission. Verizon will pay $16 million to the attorneys general and $4 million to the Federal Communications Commission. Virginia's share of the state payments will be $212,604.25 from Sprint, and $283,542.02 from Verizon.  

The settlements, which are in the form of Assurances of Voluntary Compliance, were submitted for approval with the Richmond City Circuit Court.

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