Judge demands more details before approving $50M Sprint settlement in 'cramming' case

A federal judge has refused to approve a proposed $50 million settlement between Sprint (NYSE: S) and the Consumer Financial Protection Bureau over charges related to the carrier's unauthorized third-party subscriptions and premium text messaging services--unless the carrier and the agency offer additional details about the agreement.

The settlement between Sprint and the CFPB is part of a larger agreement Sprint and Verizon Wireless (NYSE: VZ) reached last week with the FCC over the issue. Already, T-Mobile US (NYSE:TMUS) agreed in December 2014 to pay at least $90 million to settle an investigation in its use of third-party charges (called "cramming"), and AT&T Mobility (NYSE: T) agreed to pay a $105 million penalty in October 2014 over similar charges.

As Reuters notes, in an order filed in New York federal court, U.S. District Judge William Pauley said documents filed jointly by Sprint and the CFPB did not include any information that would allow him to determine whether the deal was fair to consumers and should be approved.

"How the Bureau believes a judge can evaluate the proposed settlement with a one sentence joint motion, no memorandum of law, and no declarations, eludes this Court," Pauley wrote, according to Reuters. "It is especially ironic, given the Bureau's core mission as described on its website to 'give consumers the information they need to understand the terms of their agreements.'"

Pauley did not indicate that the proposed settlement appeared unfair or unreasonable. However, as Reuters notes, several federal judges have indicated documents filed in similar cases do not include enough information.

"We are reviewing Judge Pauley's order and we will go through the necessary steps to address this matter with the court," a Sprint spokeswoman told Reuters. A spokeswoman for the CFPB declined to comment, Reuters said, but said the agency would file a response to the order.

Under the terms of the agreements the carriers made with the FCC last week, Sprint's $68 million settlement includes a minimum of $50 million to fund a consumer redress program, $12 million for state governments participating in the settlement, and $6 million as a fine paid to the U.S. Treasury.

Verizon's $90 million settlement includes a minimum of $70 million to fund a consumer redress program, $16 million for state governments participating in the settlement, and $4 million as a fine paid to the U.S. Treasury.

The settlements were negotiated in coordination with the CFPB and the attorneys general of all 50 states and the District of Columbia.

The FCC, working together with the CFPB, the Federal Trade Commission and states' attorneys general, has brought a total of $353 million in penalties and restitution against the nation's four Tier 1 wireless carriers, structuring these settlements so that $267.5 million of the total would be returned to affected customers.

For more:
- see this Reuters article
- see this Kansas City Star article
- see this Courthouse News article

Related Articles:
T-Mobile to pay $90M to settle FCC probe into unauthorized third-party charges
AT&T to pay record $105M settlement related to unauthorized premium SMS billing
T-Mobile's Legere accuses FTC of 'sensationalizing' premium SMS lawsuit
FTC: T-Mobile netted 'hundreds of millions of dollars' in fraudulent premium SMS charges
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