Sprint and Verizon will pay $120 million to settle a lawsuit claiming the cell phone providers charged consumers more than $100 million in unauthorized third-party charges, the Consumer Financial Protection Bureau said this week.
The lawsuit claimed users of both companies were charged after they clicked on ads for “free” digital content such as daily horoscopes and ringtones, the bureau said. The charges were done without the consent of the customers, and many of them weren't aware that third-parties could charge to their wireless cell phone bills.
The bureau said the illegal billing went “undetected for months.” The lawsuit also claimed both Sprint and Verizon's “billing systems invited illegal third-party charges and the companies did little or nothing to root them out,” the bureau said.
The companies also allegedly failed to respond or track complaints made by its customers about the illegal charges, even though it collected “hundreds of millions of dollars” in funds by serving as the payment processor for the third-party companies. The bureau said Sprint and Verizon received 30 to 40 percent for every charge by a third-party company.
The bureau filed the charges under the Dodd-Frank Act, which states it can hold companies accountable if they participate in unfair, deceptive or abusive practices.