Menu
US agency sues Sprint for alleged unauthorized charges

US agency sues Sprint for alleged unauthorized charges

Consumer protection bureau says Sprint's third-party billing system was a breeding ground for unauthorized text message charges

The U.S. Consumer Financial Protection Bureau has filed a lawsuit accusing Sprint of illegally billing mobile customers for tens of millions[m] of dollars in unauthorized third-party charges.

Sprint operated a billing system that allowed third parties to cram unauthorized charges on customers' mobile bills and ignored complaints about the charges, the CFPB alleged in its complaint.

The complaint from the CFPB, an agency established by Congress in 2010 to protect customers of the U.S. financial sector, mirrors complaints made by the U.S. Federal Communications Commission, the Federal Trade Commission and 51 state-level governments against AT&T earlier this year. In October, AT&T agreed to pay US $105 million[m] to settle those complaints of similar unauthorized third-party charges.

As the use of mobile payments grows, the CFPB will hold mobile carriers accountable for "illegal" third-party billing, CFPB Director Richard Cordray[cq] said. "Consumers ended up paying tens of millions of dollars in unauthorized charges, even though many of them had no idea that third parties could even place charges on their bills," he said in a statement.

FCC action on Sprint charges is pending, a spokeswoman said. In the meantime, the FCC is working closely with the CFPB. "Protecting consumers from unauthorized fees on their phone bills is a team effort," she added by email.

Sprint didn't immediately respond to a request for a response to the CFPB lawsuit.

Between 2004 and 2013, many mobile carriers allowed third-party billing for premium text messages, the CFPB said. Sprint outsourced payment processing for these digital purchases to vendors called billing aggregators without properly monitoring them, the agency alleged.

That lack of oversight gave aggregators "near unfettered" access to Sprint customers' accounts, the agency alleged. Sprint's system enabled sellers who, in some cases, only needed consumers' phone numbers to cram illegitimate charges onto bills.

The charges ranged from one-time fees of $0.99 to $4.99 to monthly subscriptions that cost about $9.99 a month, the agency said. Sprint received a 30 to 40 percent cut of the gross revenue from these charges.

The CFPB alleged that Sprint violated the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act's prohibition on unfair practices, by among other things, automatically billing consumers for illegitimate charges without their consent. The company also disregarded red flags showing that its system was a "breeding ground" for unauthorized charges, the agency said.

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's email address is grant_gross@idg.com.

Follow Us

Join the New Zealand Reseller News newsletter!

Error: Please check your email address.

Tags U.S. Federal Trade Commissionsprintat&tregulationU.S. Federal Communications CommissionmobileRichard CordraygovernmentU.S. Consumer Financial Protection Bureau

Featured

Slideshows

Arrow exclusively introduces Tenable Network Security to A/NZ channel

Arrow exclusively introduces Tenable Network Security to A/NZ channel

Arrow Electronics introduced Tenable Network Security to local resellers in Sydney last week, officially launching the distributor's latest security partnership across Australia and New Zealand. Representing the first direct distribution agreement locally for Tenable specifically, the deal sees Arrow deliver security solutions directly to mid-market and enterprise channel partners on both sides of the Tasman.

Arrow exclusively introduces Tenable Network Security to A/NZ channel
Examining the changing job scene in the Kiwi channel

Examining the changing job scene in the Kiwi channel

Typically, the New Year brings new opportunities for personnel within the Kiwi channel. 2017 started no differently, with a host of appointments, departures and reshuffles across vendor, distributor and reseller businesses. As a result, the job scene across New Zealand has changed - here’s a run down of who is working where in the year ahead…

Examining the changing job scene in the Kiwi channel
​What are the top 10 tech trends for New Zealand in 2017?

​What are the top 10 tech trends for New Zealand in 2017?

Digital Transformation (DX) has been a critical topic for business over the last few years and IDC is now predicting a step change as DX reaches macroeconomic levels. By 2020 a DX economy will emerge and it will become the core of what New Zealand industries focus on. From the board level through to the C-Suite, Kiwi organisations must be prepared to think and act digital when the DX economy emerges in 2017.

​What are the top 10 tech trends for New Zealand in 2017?
Show Comments