The Federal Communications Commission (FCC) is on an apparent pro-consumer streak. In October, it partnered with the Federal Trade Commission (FTC) in leveling charges against AT&T, when it accused the wireless provider of capriciously throttling unlimited data plans. It threatened Verizon with an investigation if it chose to do the same. Now, the agency is turning its attention towards the transgressive industry practice known as “cramming,” in which charges from so-called premium apps are hidden in customers’ bills.
The agency has already penalized AT&T for the practice, and now, according to a report by the Wall Street Journal, it’s moving on to Sprint. Based on the report, a majority of FCC commissioners will vote in favor of fining Sprint $105 million for unauthorized charges on customers’ cellphone bills.
The fine, which will be set aside in part to refund illicitly billed customers, ties for the largest fine dispensed in the agency’s crusade against carriers that surreptitiously bill customers for third-party services, including ring tones, text message alerts, and horoscopes. AT&T paid $105 million in October to settle identical claims. An FTC case filed against T-Mobile in July is still pending.
The nature of the services on paper is often unclear — AT&T grouped them under the euphemism “AT&T Monthly Subscriptions” — and many carriers don’t notify customers of enrollment. Carriers receive a 30 to 40 percent cut of the profits, which can amount to hundreds of millions of dollars. As many as 20 million people a year are affected, FCC Chairman Tom Wheeler says. At the behest of state attorneys general, AT&T, T-Mobile, Sprint, and Verizon stopped billing customers for third-party services in November.
An agency probe, coordinated with the Consumer Financial Protection Bureau and various State Attorneys General, found evidence of “willful violation” of FCC truth-in-billing rules, which require that companies clarify service billing on statements. In a three-month window from August to October 2013, it found that Sprint received almost 35,000 complaints about unwanted charges.
According to the Journal’s sources, the agency will make its designs public in the coming weeks. It’s unclear whether or not Sprint will follow in AT&T’s footsteps and choose to settle before then.