17 Dec The feds are suing Sprint for charging Americans ‘hundreds of millions’ in bogus fees
The Consumer Financial Protection Bureau is suing Sprint, the country’s third-largest wireless carrier, for taking hundreds of millions of dollars from its customers without their knowledge.
Sprint allowed third parties to add fees to customers bills, though it knew those customers likely didn’t know about the charges and didn’t authorize them, according to the suit. The company turned a blind eye to “numerous red flags” about the practice, the lawsuit alleges. Even when Sprint customers tried to fight the fees, the company didn’t do enough to resolve the complaints.
“As the use of mobile payments grows, we will continue to hold wireless carriers accountable for illegal third-party billing,” said CFPB director Richard Cordray.
The case, the first of its kind for the CFPB, focuses on a practice known as “cramming,” or when a carrier allows a third-party company to slip new fees onto consumers’ bills for services the customer never signed up for. The tactic can be lucrative for wireless carriers because the cellular provider typically takes a share of the charges. For every bogus payment charged to Sprint customers between 2004 and 2013, according to the suit, Sprint took a 40 percent cut.
“We are always vigilant for unlawful conduct in every area,” said Jeff Ehrlich, a CFBP enforcement official, “including payment processors using mobile payment platforms.”