Verizon and Sprint pay $158 million in fines for fraudulent phone charges

Verizon Wireless and Sprint have agreed to pay a combined $158 million to settle allegations that they hit cellular customers with unauthorized third-party charges, a practice known as "cramming." Most of the money will go toward giving customers refunds.

The Federal Communications Commission and Federal Trade Commission announced the settlements today. Previously, federal regulators forced T-Mobile US and AT&T to pay $90 million and $105 million, respectively, over similar allegations.

Investigations revealed that Verizon and Sprint "billed customers millions of dollars in unauthorized third-party premium text messaging services [PSMS], a practice called 'cramming,'" the FCC said. "The monthly charge for these third-party premium text messaging services ranged from $0.99 to $14.00, but typically were $9.99 per month. Verizon retained 30 percent or more of each third-party charge that it billed, while Sprint received approximately 35 percent of collected revenues for each of its third-party charges. Numerous consumers have complained to the FCC, other government agencies, and the carriers that they never requested or authorized the third-party services for which they were charged. Customers who called to complain were often denied refunds, and yet, when the FCC requested proof that customers had authorized charges, the carriers were unable to prove that these services were ever requested."

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