WASHINGTON -- The Federal Communications Commission announced Tuesday that Verizon Wireless and Sprint Corporation will pay tens of millions of dollars to settle claims that they unfairly billed customers for unauthorized third-party text-messaging services.
Under the agreements, Verizon will pay $90 million and Sprint $68 million over allegations they engaged in a practice called "cramming." Customers complained they were charged for third-party services they never requested, which typically cost about $10 a month, and were often denied refunds. Both companies received at least 30 percent of each charge, according to the agency.
"For too long, consumers have been charged on their phone bills for things they did not buy," FCC Chairman Tom Wheeler said in a statement. "We call these fraudulent charges 'cramming,' and with today’s agreements we are calling them history for Verizon and Sprint customers."
The FCC has been working with state attorneys general and other federal agencies to bring about $350 million in penalties and restitution against four U.S. wireless carriers, including Verizon and Sprint. The money collected from the two companies will be split among participating state governments, a consumer redress program and the U.S. Treasury. The agency is encouraging Sprint and Verizon customers to check their bills for unauthorized charges.
New York Attorney General Eric Schneiderman said in a statement on Tuesday that under the latest settlement, about 2 million New Yorkers will be eligible for refunds.
Stephanie Vinge Walsh, a spokeswoman for Sprint, said that the company "took proactive steps to monitor the third-party ecosystem." She added that it "returned tens of millions of dollars long before the government initiated its investigation of our industry."
A Verizon spokesman said that "well before any government action, Verizon Wireless stopped allowing companies to place charges for premium text message services on customers’ bills. Today’s settlement reflects Verizon’s continued focus on putting customers first."
The agreement isn't likely to hamper the bright financial prospects of Verizon, which on Tuesday agreed to buy AOL, which owns The Huffington Post, for a cool $4.4 billion.