Can you hear us now? Verizon and Sprint ordered to issue refunds for cramming charges

Here's how current and former Verizon Wireless and Sprint customers who were billed for bogus or unauthorized third-party text messaging services can apply for mobile 'cramming' refunds. The wireless carriers are to pay $158 million to settle the FCC and FTC's illegal billing investigations.

money pile
Philip Taylor (Creative Commons BY or BY-SA)

Do you just pay your cellphone bill or do you actually check out the bill first? If you are a current or former Verizon or Sprint customer, then you might want to double-check to see if you were ever billed for charges from third-parties that you did not authorize or for services you did not receive. It’s a practice known as mobile “cramming” and all the big wireless carriers have been found guilty of billing customers for unauthorized third-party premium text message services. Ringtones are but one example of Premium Short Messaging Services (PSMS) which customers did not authorize but wireless carriers still billed for such third-party services.

Yesterday the FTC and FCC announced, “Verizon Wireless will pay $90 million and Sprint Corporation will pay $68 million to settle investigations that revealed the companies billed customers millions of dollars in unauthorized third-party premium text messaging services.”

“For too long, consumers have been charged on their phone bills for things they did not buy,” said FCC Chairman Tom Wheeler. “We call these fraudulent charges ‘cramming,’ and with today’s agreements we are calling them history for Verizon and Sprint customers.”

The monthly charge for these third-party premium text messaging services ranged from $0.99 to $14.00, but typically were $9.99 per month. Verizon retained 30% or more of each third-party charge that it billed, while Sprint received approximately 35% of collected revenues for each of its third-party charges. Numerous consumers have complained to the FCC, other government agencies, and the carriers that they never requested or authorized the third-party services for which they were charged. Customers who called to complain were often denied refunds, and yet, when the FCC requested proof that customers had authorized charges, the carriers were unable to prove that these services were ever requested.

According to the FCC, the wireless carriers must now “obtain informed consent” before allowing third-party charges and those charges must be “clearly and conspicuously” identified on phone bills. Additionally, the FCC’s Enforcement Bureau requires Verizon and Sprint to “offer a free service for customers to block all third-party charges.”

Regarding Verizon Wireless cramming practices (pdf), the FCC received many complaints and gave the following example: “In just eight months in 2013 to 2014, Verizon billed tens of thousands of PSMS charges to wireless customers who complained that they had never requested or authorized the services for which they were charged. Customers complained that Verizon refused to refund the charges or refunded charges for only a few months.”

Regarding Sprint cramming (pdf), the FCC said it had received numerous complaints from consumers who claimed they never authorized the PSMS charges that showed up on their bills. “For example, in three months in 2013, Sprint issued over 30,000 PSMS refunds to thousands of wireless customers who stated that they had never requested or authorized the PSMS services for which Sprint charged them. However, some of these customers complained that Sprint would offer only partial refunds, or only refund charges for two months even if the customer had been charged for unauthorized charges for much longer.”

You have until December 31, 2015 to submit a claim to Verizon and Sprint.

We want our refunds. Can you hear us now?

Both companies allow claims to be filed via an online form or via a claim form that is downloaded and snail mailed to them.

Can you hear me now? inwallspeakers

The Verizon “Refund Program” states, you can file a claim “if you are a current or former Verizon Wireless account holder and believe unauthorized Premium SMS charges from third-parties may have been placed on your Verizon Wireless telephone bill(s) since July 1, 2010.”

According to the FAQs for Verizon Wireless cramming, “Common examples of Premium SMS content included sports information, entertainment, wireless telephone screen backgrounds, ringtones, and subscriptions to other services provided to wireless telephone users. Verizon Wireless discontinued delivering and billing for such Premium SMS products in January 2014.” Current customers will receive their refund in the form of a credit on their wireless bill.

Verizon’s online filing lists July 1 as an important data as that is when “premium SMS billing summaries” will be available. However, the “final amount of the refund will be determined after the close of the claim period on December 31, 2015. Verizon Wireless will issue refunds for verified claims within 90 days after the claim deadline by check, credit, or account offset. Former account holders may not receive a refund if the total refund due is $3.00 or less.”

According to Sprint's online filing, “If you authorized some but not all third-party PSMS charges, you should return to this website after July 1, 2015 to register for a summary of charges, and identify the specific unauthorized charges.” There is also an option to download and mail in the claim form. The Sprint government restitution site adds “not to expect to receive your refund for at least 9 months.”

Sprint’s FAQs page explains that refunds to current customers will be applied as a “credit on your monthly bill or prepaid account.” Cramming refunds to former customers can be issued as a check or via digital disbursement. “When opting into digital disbursement, KCC is able to send money straight to your bank account without the need for you to provide your sensitive bank account number or the need to wait for a check to arrive, deposit it, and then wait for it to clear. Once KCC sends the payment, you should see the credit to your account within 2 business days.”

May 1 was the filing deadline for the AT&T cramming refund program; as part of a $105 million settlement, AT&T was ordered to pay $80 to the FTC to provide refunds, $20 million in penalties to states, and $5 million in penalty fees to the FTC.

T-Mobile customers still have until June 8 to request an account summary and until June 30, 2015 to submit a claim. T-Mobile was ordered to pay $90 million to the FTC for mobile cramming refunds to customers, $18 million in fines to states and $4.5 million in penalties to the FTC.

In total, the four largest wireless carriers in the U.S. must pay $353 million in penalties, with $267.5 million reserved as restitution to be returned to customers.

Copyright © 2015 IDG Communications, Inc.

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