WASHINGTON-Missouri Attorney General Jay Nixon today said Nextel Communications Inc. and Sprint PCS have agreed to settle a wireless consumer lawsuit that was to have gone to trial in early October. The agreement requires both carriers to use clearer and more explanatory language in mobile-phone plan advertising and in billing statements sent to cell-phone consumers in Missouri.
The two companies also will pay $50,000 each to the Missouri Merchandising Practices Revolving Fund as part of the agreements. As a result of the settlement with Nextel and Sprint PCS, Nixon dismissed the lawsuit.
Nixon filed a lawsuit against Nextel and Sprint last December, alleging they listed charges on consumers’ cell-phone bills in a misleading and deceptive manner. The companies itemized rate increases on the bills in such a way to make the increase appear to be a tax or other government-mandated fee when that was not the case, the lawsuit charged.
“This is a significant victory for cell-phone consumers, because price comparison is paramount to many consumers when they shop for cell-phone plans,” Nixon said. “Other cell-phone companies have included these types of charges in their basic rate, without tacking them on as separate items and possibly misleading customers. These agreements with Nextel and Sprint will help clarify the bottom line for consumers when comparing plans.”
Nextel listed the charges under the heading “Unit Taxes, Fees and Assessments” as a line item labeled “Federal Programs Cost Recovery,” while Sprint termed the charges “USA Regulatory Obligations and Fees” under the heading “Other Surcharges and Fees.”
While not admitting liability in the agreements, Nextel and Sprint agreed to clearly and conspicuously disclose that any amounts they bill to Missouri consumers to comply with federal mandates and initiatives-such as local number portability or E911 capabilities-are imposed by the companies and not by the federal or state governments. The companies also will disclose in their advertising in Missouri that the fees are not a tax or government charge.
“Missouri cell-phone consumers now will have a better explanation of what these charges are and who has placed them on there,” Nixon said.
Nextel and Sprint PCS could not immediately be reached for comment.
But just as one lawsuit disappears, another has emerged.
A class-action lawsuit was filed Wednesday against Sprint PCS claiming its line item for “USA Regulatory Obligations and Fees” was a breach of contract. These charges “were not referred to by Sprint at the time of purchase of its service plans and are imposed unilaterally by Sprint at its discretion,” said Kathy Flaherty on whose behalf the lawsuit was filed in the Circuit Court of Palm Beach County, Fla. Sprint PCS declined to comment.
The Sprint suit follows on a similar suit against Nextel filed by the same attorney in May. Both Sprint and Nextel, as well as Cingular Wireless L.L.C. and AT&T Wireless Services Inc., impose a regulatory fee charge on their customers to implement wireless enhanced 911 and wireless LNP among other mandates.
