Sprint has been granted approval from a United States District Court judge to pay an amount of $50 million as settlement over charges of cramming practices.
Okayed by US District Court judge William Pauley, the settlement deal will have Sprint complete the settlement payment to the Consumer Financial Protection Bureau (CFPB). This settlement is actually just a part of a larger deal that the carrier has agreed with the CFPB as well as a number of federal and state authorities over claims that Sprint had engaged in cramming. For those not in the know, cramming is the practice of placing unauthorized charges on phone bills, such as fees for digital products and services that customers either do not approve or have knowledge of.
Now that the settlement deal has been approved by a judge, Sprint can now proceed to the actual payment of the fines issued against it. As for the CFPB, the recipient of the settlement payment, it is planning to take the money and refund subscribers who were affected by the cramming practices, which may have been going on for nearly a decade now.
The CFPB is an independent federal agency established in 2010 via the Dodd-Frank Wall Street Reform and Consumer Protection Act in order to protect customers in the financial sector. When it saw no fewer than seven complaints filed against wireless carriers over cramming since the year 2013, the agency then moved to file its own complaints against carriers such as Verizon Wireless, AT&T, T-Mobile, and of course, Sprint, aiming to seek damages that will be paid back to mobile customers victimized by cramming.
How exactly were these customers bamboozled? According to the CFPB, mobile users were targeted via online ads. As soon as customers click on online ads, they were directed to web pages that asked for their mobile phone numbers in exchange for free content. But instead of actually being free, these content placed charges to wireless carriers who in turn passed them on to the customers’ phone bills. In some cases, the content promised was never even delivered, and yet mobile users where charged extra.
As explained by the CFPB, the affected customers were never notified that they were being charged additional. Furthermore, it turned out that the wireless carriers got as much as 40 percent of the revenue from the phantom charges billed to customers from the years 2004 until 2013.
But now, recent developments suggest that these carriers will not be able to get away with it, after all. Due to the CFPB’s efforts, the Big Four wireless carriers in the US are now agreeing to settlement deals. Verizon Wireless agreed to pay $90 million in fines, AT&T agreed to a $105 million settlement, T-Mobile has reached a $90 million settlement deal, and now Sprint has joined in with its $68 million settlement (that is $50 million paid to the CFPB and $18 million going to federal and state fines).
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