Telecommunications companies on the line with FTC, FCC for cramming schemes

On the heels of AT&T settling up with the Federal Communications Commission (FCC) and the Federal Trade Commission (FTC) over “cramming” practices, two more U.S. telecommunications companies are facing their own cases over similar charges.

T-Mobile agreed to settle its July lawsuit with the FTC for $90 million on Friday, and rumors, confirmed by an unnamed The Wall Street Journal source, say that the FCC is investigating Sprint Corp. for its own cramming scheme.

T-Mobile’s cramming practices allowed the company to include hidden third-party charges for services, including horoscopes, love tips and celebrity gossip, on customers’ statements. Consumers were typically billed $9.99 per month, and T-Mobile received 35 to 40 percent of every charge they included.

As part of the settlement, the company will have to contact all customers who were improperly billed and then inform them of a refund program and claims process. T-Mobile will have to reach at least $90 million in redress or other payments, and in this case, no max has been set. Theoretically, if all T-Mobile customers filed for refunds, the company’s settlement could reach well over $90 million, Travis LeBlanc, director, FCC Enforcement Bureau, said in a Friday press call.

The company’s phone bills “made it nearly impossible for consumers to find and understand third-party subscription charges,” the FTC’s press release said. Often times, the charges were buried in phone bills that totaled more than 50 pages in length.

Separately, Sprint Corp. could have its own settlement coming. The FCC is allegedly planning to fine the telecommunications company $105 million over allegations that it charged its customers for unwanted text message alerts and other services.

If Sprint’s fine is approved, the amount that consumers could be refunded would depend on the total amount that regulators believe Sprint overcharged consumers. An unnamed official said the FCC’s investigation looked at August to October 2013, a time period during which Sprint received nearly 35,000 complaints from consumers about unwanted charges.

Three of five FCC Commissioners have said they’d vote in favor of the fine, the official said. The U.S. Consumer Financial Protection Bureau (CFPB) filed a lawsuit on Wednesday against Sprint for these allegations, and in its T-Mobile-related press call, the FCC said it couldn’t publicly comment on any investigations, although it did say that it had no reason to disagree with the allegations CFPB, a “sister agency,” made.

Meanwhile, the FTC and a defendant have settled over a separate cramming case. Nathan M. Sann, a defendant in a case against American eVoice Ltd., settled with the organization over allegations that the company’s operation put fines on consumers’ landline phone bills for unwanted voicemail services.

T-Mobile’s case, in particular, was meant to serve as a signal to all U.S. telecommunications companies, said LeBlanc. The companies will be, “held accountable for charging consumers millions of dollars in bogus charges.”


Via: scmagazine

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