Sprint using Progressive Finance to provide loans to customers for devices without a credit check

Sprint (NYSE: S) began using a third-party service called Progressive Finance a few weeks ago in an effort to sell phones at retail to customers without a credit check while minimizing the risk of bad debt. And according to Wave7 Research, the carrier has begun extending the offering to some of its dealer partners.

Progressive Finance is reportedly operated by a Utah-based company that provides leasing and purchase programs to retailers. The service allows those retailers to sell goods and services under a financing model that doesn't require a credit check.

Sprint already offers equipment installation plans and leasing options for customers buying new phones, but those plans require a credit check. Customers who don't want to submit to a credit check can buy the phone at full price upfront. Progressive Finance provides a way for credit-challenged Sprint customers to get a phone without paying full price upfront and protects Sprint from swallowing the full cost of handsets of users who stop making their payments.

Progressive -- which is not affiliated with the insurance company of the same name -- also provided the service to Cricket and MetroPCS a few years ago before those carriers were acquired by AT&T and T-Mobile, respectively.

The extension of the Progressive Finance program to some Sprint dealers was first reported by Wave7, which said its checks indicated "that there is some limited traction for the offer."

A Sprint representative was unable to comment on the program, and Progressive failed to respond to an inquiry from FierceWireless. However, FierceWireless confirmed the existence of the program in calls to retail locations.

"Dealers are positive on the offer, as the risk is all assumed by Progressive, removing the risk of 'chargebacks' when customers fail to make payments on phones," Wave7 wrote in a recent report. "Progressive Finance assumes the risk, but customers have a job, checking account, and a legal ID."

Sprint executives have recently emphasized the carrier's focus on more lucrative subscribers, perhaps at the expense of prepaid users and consumers with insufficient credit. Analysts from Wells Fargo last week said that strategy is likely to increase Sprint's churn during the current quarter but boost the carrier's bottom line over the long haul.

Indeed, U.S. carriers have begun to face a conundrum as growth of the smartphone market slows to a halt. While market share is still a crucial measuring stick, profits are the overriding objective. Indeed, T-Mobile was forced to shore up its consumer credit policies recently after bad debt expense increased in the second half of 2015, Wells Fargo Securities noted earlier this month.

By leveraging Progressive Finance, though, Sprint may be able to continue to court consumers with subpar credit while minimizing the risk of not getting paid for devices and services. And Progressive Finance is just one of the tools Sprint has leveraged in its attempts to shore up its finances. The carrier has also seen dividends from the handset leasing company set up by parent SoftBank and other investors designed to take the financing of leased devices off its balance sheet, and Chairman Masayoshi Son reportedly plans to create a subsidiary of SoftBank that would allow Sprint to offer some network gear and spectrum as collateral for as much as $5 billion in loans.

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