Sprint and Verizon are the last major wireless carriers in the U.S. to agree to a settlement with the government over millions of dollars in unauthorized cellphone charges.
Sprint has agreed to pay customers up to $68 million in relief over billing practices known as “cramming,” and Verizon Wireless will pay $90 million. Late last year, AT&T and T-Mobile settled similar cases with the government, agreeing to pay $105 million and $90 million, respectively.
In all four cases, the carriers are accused of letting companies charge consumers tens of millions of dollars for services such as ringtones or horoscopes that the consumers had not requested. Generally, the carriers profited from these premium SMS services by keeping 40 percent of the revenue.
Today’s settlements were announced in a release distributed by New York Attorney General Eric T. Schneiderman.
UPDATE: In a separate announcement, Washington State Attorney General Bob Ferguson said an estimated 774,900 Washington customers were victims of bill cramming. “I will not tolerate deceptive billing practices,” he said, in a release. “My office will hold any company accountable that tries to hide unauthorized charges in the fine print of a consumer’s bill.”
As part of the agreements, all four carriers announced that they would stop billing customers for premium SMS services in the fall of 2013.
“It’s both unfair and illegal to charge consumers for services they did not request, a practice that Sprint and Verizon engaged in over several years,” said Schneiderman.
Under the settlement terms, Sprint will pay $68 million and Verizon will pay $90 million. Of these amounts Sprint and Verizon will provide $50 million and $70 million, respectively to consumers who were victims of cramming. The rest of the funds will go to Attorneys General and the Federal Communications Commission.
[Update: An earlier version of this story only reported Sprint’s settlement because the news was just breaking.]