Consumer Financial Protection Bureau Targets Sprint for Illegal Cramming

Print Friendly, PDF & Email

December 22, 2014

crammingOn December 17, 2014, the Consumer Financial Protection Bureau (“CFPB”) filed a lawsuit against Sprint Corporation (“Sprint”) alleging that Sprint illegally crammed third-party charges on its customers’ cellular telephone bills.  The lawsuit, filed in the United States District Court for the Southern District of New York, marks the first brought by the CFPB against a cellular telephone provider.   Although the lawsuit does not include a specific dollar amount, it seeks damages against Sprint including payment of restitution to customers and disgorgement of all profits obtained as a result of the alleged illegal cramming.

Allegations of Illegal Cramming Against Sprint

According to the complaint, between 2004 and 2013, Sprint illegally crammed third-party premium short messaging service (“PSMS”) charges (for services such as ringtones, wallpaper, horoscopes and flirting tips) on its customers’ cellular telephone bills.  The CFPB alleges that Sprint did so by relying on third-party billing aggregators, at least two of which helped certain merchants to bill alleged unauthorized charges from at least January 2011 to November 2013.

The complaint also alleges that Sprint ignored customer complaints and other warning signs in continuing its PSMS billing activities.  For example, the CFPB points out that in 2010, Sprint settled a law-enforcement action related to cramming with the Florida Attorney General.  Despite this settlement, Sprint continued to outsource payment processing and compliance to billing aggregators.  Sprint did so even after the aggregators themselves settled with other regulatory agencies.  As a result of its PSMS billing activities, the complaint asserts that Spring retained 40% of gross revenues of all of the alleged illegal cramming charges.

Sprint May Face Further Action for Illegal Cramming

On December 16, 2014, several media outlets reported that the Federal Communications Commission (“FCC”) was close to announcing a $105 million fine against Sprint for illegal cramming.  The deputy enforcement director of the CFPB has declined to comment on whether the FCC will take separate action against Sprint, but has noted that the FCC and CFPB have been working closely on this matter.  An FCC spokesperson has confirmed the substance of same, but did not elaborate on any further regulatory action that may be taken against Sprint.

Protect Yourself

Last year, we blogged about the CFPB’s enforcement efforts against payday lenders.  Although the CFPB has declined to comment on whether it would bring similar lawsuits against other wireless operators for cramming, its increased activity in this field, as well as the FCC’s ongoing regulatory crackdown on wireless carriers, makes it likely that cramming litigation will continue into the foreseeable future.

If you are a third-party marketer that charges for your products or services via mobile billing or if you have been served with legal process relating to your billing or marketing practices, please e-mail us at or call us at (212) 246-0900.

The material contained herein is provided for informational purposes only and is not legal advice, nor is it a substitute for obtaining legal advice from an attorney.  Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.

Attorney Advertising

David O. Klein

David O. Klein

David Klein is one of the most recognized attorneys in the telemarketing, technology, Internet marketing, sweepstakes and telecommunications fields. Skilled at counseling clients on a broad range of technology-related matters, David Klein has substantial experience in negotiating and drafting complex licensing, marketing and Internet agreements.

Schedule a Call
In The Know

Trending Topics

New York Sweepstakes Law blog- Klein Moynihan Turco

New York Sweepstakes Law: Are You Compliant?

Print Friendly, PDF & Email

In general, a lottery exists when entrants pay for the chance to win a prize. States alone reserve the right to administer lotteries. Businesses can eliminate one element of what would otherwise be an illegal lottery, in order to transform it into a legal promotional game. If the requirement to

TCPA surveys

An Ad or not an Ad: NY Weighs in on TCPA Surveys

Print Friendly, PDF & Email

Another day, another court decision that refines constitutes a Telephone Consumer Protection Act (“TCPA”) unsolicited fax advertisement. A Manhattan-based federal court recently issued a decision that removes faxed invitations to participate in a survey from the TCPA definition of advertisement. In drawing this distinction for TCPA surveys, the Court held

NY sports gambling law- Klein Moynihan Turco

Agreement Reached to Enact NY Sports Gambling Law

Print Friendly, PDF & Email

This week, Governor Andrew Cuomo and the New York State Legislature agreed to a budget deal that will bring mobile sports betting to the State through a unique NY sports gambling law.  Upon the Governor’s signature, NY sports gambling is primed to become the nation’s largest market. However, New York

UK and US Social Media Influencer Laws

UK and US Social Media Influencer Laws

Print Friendly, PDF & Email

In September of 2020, the United Kingdom’s (“UK”) Committee of Advertising Practice (“CAP”) reviewed the Instagram accounts of 122 UK-based social media influencers to determine whether content was being properly flagged as advertising in accordance with applicable social media influencer laws. This past March, the UK Advertising Standards Authority (“ASA”)

Share on facebook
Share on google
Share on twitter
Share on linkedin