In December 2014, T-Mobile faced the music and agreed to settle with the Federal Trade Commission (FTC) and the Federal Communications Commission (FCC) to the tune of $90 million for phone “cramming.” A few months prior, in October, AT&T coughed up $105 million for the same offense. So what is cramming? Cramming consists of unauthorized charges that appear on your monthly phone bill, the bulk of which come from third-party Premium Short Message Services (PSMS).
Wireless carriers have been reluctant to crackdown on cramming in the past because they receive a kickback (somewhere in the neighborhood of 30 to 40 percent) from each unauthorized charge that appears on a customer’s bill which translates to millions of “easy” revenue. Considering that the charges range from $0.99 to $14.00 (with the average charge being around $9.99 per month) explains the hefty fines imposed by the FTC and FCC.
With AT&T and T-Mobile both down for the count with regards to cramming, that leaves Sprint and Verizon as the remaining two of America’s “Big Four” wireless carriers. Today, Sprint and Verizon settled with the FCC for $68 million and $90 million respectively.
In reference to Sprint, $50 million of the settlement will go towards giving customers refunds for unauthorized charges, $12 million will be distributed to the 50 states and District of Columbia, and the remaining $6 million will go to the U.S. Treasury. As for Verizon, $70 million, $16 million, and $4 million will go to customer refunds, the 50 states and D.C., and the U.S. Treasury respectively.
"Consumers rightfully expect their monthly phone bills will reflect only those services that they purchased," said FCC Enforcement Bureau Chief Travis LeBlanc. "Today's settlements put in place strong protections that will prevent consumers from being victimized by these kinds of practices in the future.”