Sprint accused of being complicit in massive hidden-fee, 'gotcha' cell phone cramming
Wireless giant Sprint enabled hidden-fee abuse of its customers for nearly a decade, the Consumer Financial Protection Bureau alleged on Wednesday. Sprint allowed third-party firms to "cram" unwanted services onto consumer bills, and kept about one-third of the proceeds for itself, the CFPB said. In other words, Sprint was complicit in, and profited from, one of the biggest "Gotcha" conspiracies ever.
The Federal Communications Commission is also readying a cramming lawsuit against Sprint, various outlets have reported.
Sprint denied the allegations, telling TheHill.com: "We are disappointed that the CFPB has decided to target Sprint on this issue, and we strongly disagree with its characterization of our business practices."
Earlier this year, AT&T settled similar charges with the Federal Trade Commission, resulting in a $105 million price tag for that other wireless giant.
Numerous Congressional investigations, and stories by this journalist, have chronicled various cramming enterprises during the past 10 years. Most consumers don't even know a third-party firm can sneak charges on their phone bills under the guise of ring tones or monthly horoscope readings.
In the announcement, CFPB Director Richard Cordray slammed Sprint's participation in the scheme.
"Sprint’s flawed billing system allowed unscrupulous merchants to add unauthorized charges to wireless bills, and consumers ended up paying tens of millions of dollars in such charges. Many of these consumers had no idea that third parties could even place charges on their bills," he said in a statement. "As a result, consumers were subjected to millions of unauthorized charges, including one-time fees ranging from $0.99 to $4.99 as well as monthly subscriptions that cost about $9.99 per month.
"Most consumers who faced these unauthorized charges were targeted online. Customers clicked on ads that brought them to websites asking them to enter their cellphone numbers. Some merchants tricked consumers into providing their cellphone numbers to receive 'free' digital content and then charged for it. Other merchants simply placed fabricated charges on people’s bills without delivering any goods or even communicating with them."
Thee CFPB also accuses Sprint of:
Disregarding red flags about third parties Sprint disregarded red flags showing that its system was a breeding ground for unauthorized charges. Sprint continued to outsource to billing aggregators despite lawsuits about cramming against the very same aggregators that Sprint used. In addition, Sprint should have known that cramming was a major problem as the company had already been subject to a law enforcement action related to the issue.
Ignoring consumer complaints about unauthorized charges Sprint failed to track customer complaints about unauthorized charges, and as a result, lacked the most basic alert mechanism that could have revealed flaws in its monitoring systems. Sprint also failed to provide full and prompt remediation to consumers subjected to these charges. In some instances, Sprint refused to provide refunds and only offered instructions on how to block future third-party charges. Other times, Sprint refused to provide refunds and referred customers to the merchants.