December 20, 2014
E-Commerce Times quoted me in Feds Pounce on Sprint for Phone Bill Cramming. It opens,
The United States government is delivering a one-two punch to Sprint over the practice of cramming — allowing third parties to place unauthorized charges on customers’ bills.
The Consumer Finance Protection Bureau on Thursday filed a civil suit against Sprint over the issue.
Meanwhile, the Federal Communications Commission reportedly is planning to hit Sprint with a US$105 million fine.
Coordination between the government agencies “is not atypical,” said David Reiss, professor of law at the Brooklyn Law School.
“Frequently federal government agencies coordinate their actions for better results,” he told the E-Commerce Times.
It’s possible that the FCC was negotiating with Sprint prior to the CFPB taking action, suggested Robert Jaworsky, a partner at ReedSmith.
“I doubt the FCC will take any action while this lawsuit is pending,” he told the E-Commerce Times.
The CFPB’s Allegations
Sprint charged wireless customers for unauthorized third-party services from 2004 through 2013, costing them millions of dollars each year, by creating a billing and payment system that provided third parties with unfettered access to its customers’ accounts, according to the CFPB complaint.
Sprint automatically enrolled customers in this billing system without their knowledge or consent, and many customers were unaware of the unauthorized charges, the bureau maintains.
Sprint continued to operate its system despite numerous red flags, including high refund rates, along with complaints from customers, law enforcement agencies and consumer groups, the CFPB claims. The carrier retained 40 percent of the gross revenue collected for the third-party charges, totaling “hundreds of millions of dollars.”
Sprint took advantage of its customers, treated them unfairly in various ways, mishandled or ignored complaints about the unauthorized charges, and didn’t track them, said CFPB director Robert Cordray.
Sprint refused to provide refunds to some customers, instead telling them how to block future third-party charges, he added — and sometimes it referred victims back to the scammers themselves.| Permalink