Verizon Wireless will be paying an amount of $90 million to the Federal Communications Commission over charges of cramming, a practice that unfairly bills customers for services without their knowledge and full consent.
Also paying is fellow wireless carrier Sprint, who will be handing over an amount of $68 million over similar charges. Combined, both wireless carriers will be paying a total of $158 million in restitution and fees. $120 million of that amount will be paid to affected customers.
Verizon Wireless and Sprint now join other carriers such as AT&T and T-Mobile, who both have been hit by the FCC in the past few months over similar charges. AT&T agreed to pay a $105 million settlement while T-Mobile is to hand over $90 million.
Tom Wheeler, Chairman of the FCC, noted that this practice of charging customers on their cell phone bills for things they did not purchase has been going on for some time now, and he intent on having his agency put a stop to these fraudulent practices.
The bulk of the customers were targeted online via ads that once clicked on, directed people to websites requesting to get their cell phone numbers. Some parties misled customers into giving their cell phone numbers in exchange for free digital content, only to be charged for it later. In other cases, these third parties placed charges for goods that were never delivered or brought to the attention of mobile users.
Similar to AT&T's settlement, most of the money paid by Verizon will not go to the federal government, but instead, $70 million of it will be utilized to fund a consumer redress program that the FCC has set up. $16 million will be going to state governments, while the government will get the remaining $4 million.
As investigated by the FCC, Sprint had gotten 35 percent of crammed charges, while Verizon Wireless collected 30 percent. The fact that both wireless companies were found to have received a cut in the crammed charges certainly does not help their case.
And the FCC was very aggressive in punishing these carriers, even if they constitute the big four wireless carriers in the United States. As agreed in their settlements, these wireless carriers will stop offering commercial third party PSMS charges, then obtain clear consent from customers before allowing third party charges, and explicitly specify third party charges on cell phone bills.
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