Blumenthal Statement on Verizon and Sprint $158 Million Settlement with FCC for Mobile Cramming

(Washington, DC) – Today, U.S. Senator Richard Blumenthal (D-Conn.) issued the following statement on the settlement agreed upon by Verizon and Sprint with the FCC for mobile cramming, a practice which has cost consumers millions of dollars in unauthorized charges:

“This latest settlement proves the insidious practice of cramming was widespread across all four national wireless carriers and forced unlawful and unscrupulous charges on countless consumers without their consent or knowledge. Consumers are best protected when federal agencies work together on their behalf so I applaud the efforts of the FCC and CFPB and urge them to ensure that consumers are made aware of the opportunity to reclaim the money they are owed. While this and earlier settlements require all the carriers to clean up their practices related to “premium SMS” text messages, we know from the Senate’s investigation that these scam artists will just move on to the next opportunity to take advantage of consumers. I reiterate my call for the FCC to finish their rulemaking and set in place strong, enforceable industry-wide standards to protect mobile consumers from this blatant pickpocketing.”

Blumenthal was an original co-sponsor of the Fair Telephone Billing Act on 2013, which would block any local exchange carrier or provider of interconnected VoIP services from placing any third-party charge on a customer’s bill – unless the charge is for a telephone-related service, like a long distance or collect call, or a “bundled” service, like satellite television service, that is jointly marketed or sold with a company’s telephone service.

A report released last year during a Senate Commerce Committee that Blumenthal was chairing exposed the widespread cramming practices in the mobile industry.

The investigation and report by the Committee provided overwhelming evidence that cramming on wireless phones has now become widespread and caused consumers substantial harm. Specifically, this report issued in July found that third-party wireless billing has been a billion dollar industry that has yielded tremendous profits for the four largest wireless carriers, AT&T, Sprint, T-Mobile, and Verizon. The cut that these carriers received was often 30%-40% of each vendor’s charge. Cramming first began in the 1990s and in the late 2000’s the wireless industry was on notice about significant wireless cramming problems, however the abuses continued. Documents obtained by the Committee show carriers allowed vendors with repeatedly high monthly consumer fraud rates – where refund requests often topped 50 percent of monthly revenues – to continue to bill their subscribers.