In May 2015, the Federal Communications Commission (FCC), the Consumer Financial Protection Bureau (CFPB), and the attorneys general of all 50 states and the District of Columbia announced coordinated enforcement actions against Sprint Corporation and Verizon Wireless. The actions addressed “mobile cramming”—the placement of unauthorized third-party charges on consumers’ wireless bills, often through premium short message service (PSMS) subscriptions.
These subscriptions covered digital products such as ringtones, wallpapers, horoscopes, celebrity news, and other recurring text-message services. Charges ranged from $0.99 to $14.00 and were commonly $9.99 per month. Because they appeared within a longer wireless bill and could recur for months, consumers sometimes did not notice them promptly. Regulators alleged that the carriers’ billing systems allowed third-party merchants to place charges without adequate proof of customer authorization and that complaint handling and refund practices were often insufficient.
Settlement Terms
- Sprint Corporation: Sprint agreed to pay $68 million, including $50 million for consumer refunds, $12 million to participating states and the District of Columbia, and $6 million in federal penalties.
- Verizon Wireless: Verizon agreed to pay $90 million, including $70 million for consumer refunds, $16 million to participating states and the District of Columbia, and $4 million in federal penalties.
- Combined resolution: The two settlements totaled $158 million—$120 million in consumer redress and $38 million in federal and state payments and penalties.
Compliance and Consumer-Protection Impact
The settlements did more than provide refunds. They required stronger controls over third-party billing, including clearer disclosures, documented consumer authorization before charges could be placed, improved monitoring of merchants and billing aggregators, accessible methods for customers to block third-party charges, and more responsive complaint and refund procedures. The cases also focused attention on the carriers’ financial role in the billing chain: Verizon retained 30% or more of certain third-party charges, while Sprint received approximately 35% of collected revenue.
Significance for Government Telecom Overbilling Research
At the time, these were among the largest wireless-carrier billing enforcement actions in the United States. The coordinated federal-state approach established an important accountability principle: a carrier could be held responsible not only for its own service charges, but also for unauthorized third-party charges that it enabled, processed, collected, and shared in financially. For government clients reviewing telecom expenditures, the case supports scrutiny of recurring line-item charges, premium messaging and other third-party services, authorization records, refund policies, complaint histories, and the controls used to prevent vendors or aggregators from adding charges to an account. It also illustrates why apparently small monthly charges can produce substantial losses when multiplied across many lines and billing periods.
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