Verizon Communications Inc. and Sprint Corp. have agreed to pay a combined $158 million, including at least $120 million in consumer refunds, to settle federal and state investigations into allegations mobile customers were improperly billed for premium text messages.
The so-called cramming of unauthorized charges onto customers' bills involved one-time fees of 99 cents to $4.99 for third-party text-messaging services and monthly subscriptions to those messages that cost $9.99 to $14 a month, federal regulators said Tuesday.
Customers complained that they never authorized the charges, according to the Federal Communications Commission.
The FCC said Verizon kept at least 30% of the fees charged by the third-party services. Sprint received about 35% of such fees paid by its customers, the FCC said.
The agency was joined by the Consumer Financial Protection Bureau and the attorneys general of all 50 states and the District of Columbia in negotiating the settlements.
FOR THE RECORD:
A previous version of this article said the Federal Trade Commission was involved in the Verizon and Sprint settlements. It was only involved in the AT&T and T-Mobile settlements.
"Sprint and Verizon had flawed billing systems that allowed merchants to add unauthorized charges to wireless customer bills," said Richard Cordray, the bureau's director.
"Consumers bore the brunt of those charges and ended up paying millions of dollars while the companies reaped profits," he said.
The companies are the latest wireless carriers to agree to major settlements of federal and state cramming allegations.
AT&T Inc. agreed to pay $105 million, including $80 million in refunds, in October. Two months later, T-Mobile US Inc. agreed to pay $90 million, including $67.5 million in refunds.
"For too long, consumers have been charged on their phone bills for things they did not buy," said FCC Chairman Tom Wheeler.
Verizon agreed to pay $90 million — at least $70 million in refunds, $16 million to state governments and a $4-million federal fine. Sprint will pay $68 million, including at least $50 million in refunds, $12 million to the states and a $6-million federal fine.
Verizon said that it had stopped the third-party charges "well before any government action" and that the settlement "reflects Verizon's continued focus on putting customers first."
Sprint said it had taken "proactive steps" to prevent cramming. "This settlement gives our customers who believe they were wrongfully billed ... the ability to get a refund," the company said.
California will receive about $1.3 million from the settlement, said state Atty. Gen. Kamala D. Harris.
"This settlement holds Sprint and Verizon accountable for their actions, ends these bad business practices and refunds consumers," she said.
The Consumer Financial Protection Bureau will oversee the refunds.