Sprint Corp has been sued by the US Consumer Financial Protection Bureau (CFPB) for cramming, a practice of unauthorized charging of cellphone bills of customers. The agency has imposed a USD 105 million cramming fine against the company.
The latest movement by the regulatory body marks the third cramming-related enforcement action by the government this year.
CFPB’s director Richard Cordray said, “Sprint mistreated consumers egregiously by creating a billing system that invited illegal third-party charges and processed them in a highly irresponsible manner.”
In the lawsuit, CFPB alleged that the wireless carrier had allowed third parties between 2004 and 2013 to charge the mobile phone consumers tens of millions of dollars for value added services like ringtones or text-message horoscopes that they had never requested, while maintaining the 40 percent of the gross revenue.
Expressing disappointment over CFPB’s move, Sprint said that it has been targeted by the agency in the lawsuit and also disputed the accusations. The company also said that it took various initiatives to monitor the charges levied by the third-party, like vetting billing companies and hiring an outside compliance vendor.
Releasing a statement, Sprint spokeswoman Stephanie Vinge Walsh rejected the allegations saying “We strongly disagree with (the CFPB’s) characterization of our business practices.”
“It appears the CFPB has decided to use this issue as the test case on whether it has legal authority to assert jurisdiction over wireless carriers,” Walsh said in an emailed statement.
Earlier in July 2014, the Federal Trade Commission had filed a case against T-Mobile US Inc over some similar billing issues, while the FCC and the FTC had settled a similar case with AT&T Inc in October this year.