Sprint Corp. and Verizon Wireless have agreed to pay a combined $158 million to settle claims that the carriers charged customers for services they did not order, like horoscope and trivia subscriptions.
U.S. wireless providers made hundreds of millions of dollars by taking cuts from fees billed to consumers for the extra services, a practice known as "cramming," the U.S. Federal Trade Commission has said. AT&T Inc. and T-Mobile USA agreed to pay a combined $195 million last year to settle state and federal probes into the practice.
Bloomberg News reported that Sprint and the Consumer Financial Protection Bureau submitted a proposed settlement under which the carrier agreed to set aside $50 million to compensate customers. Sprint did not admit to the allegations in the CFPB's complaint.
Sprint and Verizon said in separate statements that they had attempted to squelch or reimburse improper charges before the government acted, and said customers could apply for refunds.
A common cramming charge is a $9.99-per-month text messaging subscription service for items such as horoscopes, trivia, sports scores, or other information. All four mobile carriers said in 2013 they would stop billing for those unrequested services.
"For too long, consumers have been charged on their phone bills for things they did not buy," said Federal Communications Commission Chairman Tom Wheeler. "We call these fraudulent charges cramming, and with today's agreements we are calling them history for Verizon and Sprint customers."
The Consumer Financial Protection Bureau will oversee the refunds.
Sprint will pay a total of $68 million and Verizon will pay $90 million to settle the cramming claims, with most of the money going back to the carriers' customers, New York Attorney General Eric Schneiderman said in a statement Tuesday.
"It's both unfair and illegal to charge consumers for services they did not request, a practice that Sprint and Verizon engaged in over several years," Schneiderman said.
In some instances, rather than being clearly broken out, the third-party charges have been lumped under the generic terms like "usage charges" on customers' bills, according to the FTC.
The Los Angeles Times reported that the FCC said Verizon kept at least 30 percent of the fees charged by the third-party services. Sprint received about 35 percent of such fees paid by its customers, the FCC said.
The agency was joined by the Federal Trade Commission, the Consumer Financial Protection Bureau and the attorneys general of all 50 states and the District of Columbia in negotiating the settlements.