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.

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags governmentmobileregulationsprintat&tU.S. Federal Trade CommissionU.S. Federal Communications CommissionU.S. Consumer Financial Protection BureauRichard Cordray

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Grant Gross

IDG News Service
Show Comments

Brand Post

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Aysha Strobbe

Microsoft Office 365/HP Spectre x360

Microsoft Office continues to make a student’s life that little bit easier by offering reliable, easy to use, time-saving functionality, while continuing to develop new features that further enhance what is already a formidable collection of applications

Michael Hargreaves

Microsoft Office 365/Dell XPS 15 2-in-1

I’d recommend a Dell XPS 15 2-in-1 and the new Windows 10 to anyone who needs to get serious work done (before you kick back on your couch with your favourite Netflix show.)

Maryellen Rose George

Brother PT-P750W

It’s useful for office tasks as well as pragmatic labelling of equipment and storage – just don’t get too excited and label everything in sight!

Cathy Giles

Brother MFC-L8900CDW

The Brother MFC-L8900CDW is an absolute stand out. I struggle to fault it.

Luke Hill

MSI GT75 TITAN

I need power and lots of it. As a Front End Web developer anything less just won’t cut it which is why the MSI GT75 is an outstanding laptop for me. It’s a sleek and futuristic looking, high quality, beast that has a touch of sci-fi flare about it.

Emily Tyson

MSI GE63 Raider

If you’re looking to invest in your next work horse laptop for work or home use, you can’t go wrong with the MSI GE63.

Featured Content

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?