Sprint to pay $2.3M to settle Illinois lawsuit over rebates

Photo credit: Flickr user Mike Mozart

Sprint will pay $2.3 million and provide the names of 32,000 customers who didn’t cash rebate checks to settle a lawsuit brought by the Illinois state treasurer’s office.

The suit, which was filed in March, alleged that Sprint failed to pay $2.7 million in unclaimed rebates between 2003 and 2008. Illinois State Treasurer Michael Frerichs had claimed Sprint and its partner Young America kept promotional rebate proceeds from the Illinois residents.

Young America is a Minneapolis-based rebate clearinghouse that redeems offers for other businesses. The suit alleges that the company was given funds to cover the rebate claims but could keep uncashed rebates, dubbed "slippage."

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Sprint had previously denied the allegation to The Chicago Tribune, saying the rebates weren't withheld but rather "were sent, but not cashed." There was no ultimate finding of wrongdoing by Sprint, Frerichs’ office said.

“Rebates are used to encourage individuals to purchase a product or service,” Frerichs said in a press release announcing the settlement. “Too many times, however, that hook becomes a dizzying maze that seems to shield a payment rather than fulfill a promise.”

Frerichs’ office said the settlement means it can now begin to locate people who will then be able to claim their checks. The rebates were typically used as an incentive to purchase data plans, products or other services from Sprint.

Rebates are considered unclaimed property if not paid within five years and must be reported and paid to the treasury so they can be returned to their owner, Frerichs’ office said.

Dozens of other states have pursued Sprint and Young America over unclaimed rebates, The Chicago Tribune reported earlier this year, and in 2010 the two companies reached a $22 million settlement with 36 states over rebates owed from 1999 to 2002.

For more:
- see this Illinois State Treasurer’s office press release

Related articles:
Illinois treasurer sues Sprint over $2.7M in unclaimed subscriber rebates
U.S. Supreme Court opts not to hear Sprint's appeal in $300M tax case
Sprint to pay $2.95M to settle FTC charges that it did not tell subs with lower credit why it was charging them more

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