Deadline Approaching for Phone 'Cramming' Refunds

Verizon and Sprint subscribers take notice: It's not too late to get a piece of that $158 million "cramming" settlement that was announced in May.

How to Claim a RefundConsumers have until Dec. 31 to submit claims for a refund either through the www.sprintrefundpsms.com or www.cfpbsettlementverizon.com sites.

What's the Reason for the Refund?Verizon Wireless and Sprint agreed to pay a combined $158 million to settle investigations into whether the companies billed customers millions of dollars in unauthorized third-party products and services, according to the Federal Communications Commission. The FCC, along with the Consumer Financial Protection Bureau and state attorneys general, participated in the investigations.

What Is Cramming?The practice, which is commonly referred to as "cramming," is illegal and often goes undetected because the charges are small. The FCC said cramming has harmed tens of millions of American households.

According to the settlement, Verizon had included charges for third-party premium short message services (PSMS) on its customers' telephone bills until at least January 2014. These charges included services such as monthly subscriptions for ringtones, wallpapers and text messages providing horoscopes, flirting tips, celebrity gossip and other information. The charges ranged from $0.99 to $14, but the average charge was $9.99 per month. Verizon received 30 percent or more of each PSMS charge that it billed, according to the FCC.

The CFPB sued Sprint for billing its wireless customers for unauthorized third-party charges between 2004 and December 2013. According to the complaint, Sprint "charged its customers by creating a billing and payment-processing system that gave third parties virtually unfettered access to its customers' accounts" and Sprint "automatically enrolled its customers in its third-party billing system without their knowledge." Sprint retained 40 percent of the gross revenue, or hundreds of millions of dollars, it collected for third-party charges, the CFPB said.

The CFPB accused both companies of failing "to track customer complaints about unauthorized charges" and failing "to provide full and prompt remediation to consumers subjected to these charges."

Verizon and Sprint have previously said they stopped the cramming practice long before the government began its investigations. Sprint reps also noted that the company returned money to customers prior to the settlement.

AT&T and T-Mobile USA paid $105 million and $90 million respectively to settle similar government probes in 2014.

The FCC recommends that consumers closely review their monthly telephone bill statements and to take action if an unknown or suspicious charge is listed.