Court claims more details needed before it will approve Sprint, CFPB bill-cramming proposal
A federal judge is holding up a $50 million settlement between Sprint and the Consumer Financial Protection Bureau over bill cramming until both sides explain why the proposal is “fair, reasonable and consistent with the public interest.”
According to a decision handed down by William Pauley, district judge in the U.S. District Court for the Southern District of New York, evaluation of the “proposed settlement with a one sentence joint motion, no memorandum of law and no declaration, eludes this court,” and that it would not “rubber stamp” the settlement.
“In view of the importance of this case, there is need for consumers, Sprint shareholders and this court to get ‘the information they need to understand the terms of [this] agreement,’” the ruling stated. That information includes a motion explaining the grounds for the settlement.
The settlement was announced last week as part of a broader deal involving the Federal Communications Commission, Sprint and Verizon Wireless that totaled $158 million. Sprint’s stake totaled $68 million, with $50 million set aside to fund a consumer redress program.
The CFBP last December filed a $105 million lawsuit against Sprint alleging that through the end of 2013, Sprint allowed third-party content providers to charge Sprint customers for services they did not sign up for and ignored complaints about those charges. The independent government agency, which was created in 2010 from the Dodd-Frank Wall Street Reform and Consumer Protection Act, was seeking an unspecified amount in refunds and penalties claiming Sprint violated tenants of the act.
The bill-cramming issue has touched all four nationwide operators. T-Mobile US late last year agreed to pay $22.5 million in fines to the Federal Trade Commission tied to the practice as well as $90 million toward fully refunding customers for unwanted third-party charges. That followed a then-record $105 million fine against AT&T by the FCC connected to bogus charges to consumers for third-party subscriptions and premium text messaging services.
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