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U.S. carriers Sprint and Verizon will together spend $158 million to settle government complaints that they let third-party firms bill subscribers millions in unauthorized charges, a practice known as "cramming," the Federal Communications Commission announced on Tuesday.
Verizon will pay out the bulk of the cash, $90 million, while Sprint will owe $68 million. Most of the money should go toward refunding money to subscribers — $70 million in the case of Verizon, and $50 million from Sprint. The remaining cash will go to state governments, and fines sent to the U.S. Treasury.
Cramming victims saw bill entries for "unauthorized third-party premium text messaging services," the FCC said, yet were frequently denied refunds, even though neither carrier could prove that the charges were authorized when the FCC asked.
These services would cost anywhere between 99 cents and $14 and month, though a typical amount was $10. Verizon was said to have claimed 30 percent from each charge, while Sprint took in 35 percent.
As further conditions of the settlement, Sprint and Verizon can no longer offer the offending third-party services, and must obtain constent for any future third-party charges, also clearly labeling them on bills. Customers must be able to block such charges, and the carriers will have to regularly report back to the FCC on refunds and rule compliance.
Last year, AT&T and T-Mobile were also ordered to pay cramming-related penalties. The former was required to pay $105 million, and the latter $90 million.