Acting Attorney General John J. Hoffman announced today that New Jersey will receive a total of more than $500,000 as a result of its participation in separate global settlements with Sprint Corporation and Verizon Wireless that resolve allegations the companies engaged in unlawful “mobile cramming” – the placing of charges for unauthorized third-party services on consumers’ mobile telephone bills.
Cramming victims typically have been billed for telephone services they did not know about and did not request – for example horoscopes, trivia, sports scores and other so-called Premium Text Message Subscription Services – and typically the rate is $9.99 per month.
New Jersey and the other participating states, as well as federal regulators, allege that cramming occurred when Sprint and Verizon placed charges on consumers’ mobile telephone bills for these services—provided not by the two companies, but by an independent third-party—without consumer’ knowledge or consent.
Sprint and Verizon are the third and fourth mobile telephone providers to enter into global settlements resolving allegations of cramming. Acting Attorney General Hoffman announced similar settlements with AT&T and T-Mobile in 2014. All four mobile carriers announced they would stop billing customers for commercial Premium Text Message Services in the fall of 2013.
Under the settlements announced today, Sprint will pay a total of $68 million, and Verizon will pay a total of $90 million, to the 50 participating states, the District of Columbia, the federally-run Consumer Financial Protection Bureau and the Federal Communications Commission.
Of those overall settlement amounts, Sprint will pay $50 million to consumers who were the victims of cramming, and Verizon will pay $70 million to cramming victims. The dollars will be paid in the form of refunds to harmed customers through redress programs supervised by the Consumer Financial Protection Bureau.
Sprint also will pay $6 million to the Federal Communications Commission, and a total of $12 million to Attorneys General from the 50 participating states. Verizon will pay $4 million to the Federal Communications Commission, and a total of $16 million to Attorneys General from the 50 states.
New Jersey’s share of the Verizon settlement payout is $293,097, while its share of the Sprint settlement payout is $219,767.
Consumers can submit claims under the redress programs by visiting www.SprintRefundPSMS.com and/or www.CFPBSettlementVerizon.com.
On those Web sites, consumers can submit claims, find information about refund eligibility and how to obtain a refund, and can request a free account summary that details Premium Text Message Subscription Service purchases on their accounts.
Consumers who have questions about the redress programs can visit the program Web sites or call the settlement administrators at 877-398-8787 (Sprint) and/or 888-726-7063 (Verizon).
The settlements announced today, like the settlements entered into by AT&T and T-Mobile in late 2014, require Sprint and Verizon to stay out of the commercial Premium Text Message Subscription Service business – the platform to which law enforcement agencies attribute the bulk of the mobile cramming problem. Under each of the four settlements, the mobile carriers, including Sprint and Verizon, also must take a number of steps designed to ensure that they only bill customers for third-party charges that have been authorized, including the following:
- The carriers must obtain consumers’ express consent before billing them for third-party charges, and must ensure that consumers are only charged for services if the consumer has 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 – at the time they sign up for services -- that their mobile phones can be used to pay for third-party charges, and must inform consumers of how those third-party charges can be blocked if the consumer doesn’t want to use their phone as a payment method for third-party products. - The carriers must present third-party charges in a dedicated section of consumers’ mobile phone bills, must clearly distinguish them from the carriers’ own charges, and must include in that same section information about the consumers’ ability to block third-party charges. Deputy Attorney General Alina Wells, assigned to the Division of Law’s Consumer Fraud Prosecution Section, handled the AT&T matter on behalf of the State.