December 17, 2014 / 5:31 PM / 3 years ago

U.S. consumer bureau sues Sprint over phone bill 'cramming'

WASHINGTON (Reuters) - A U.S. consumer watchdog agency on Wednesday filed a lawsuit against wireless carrier Sprint Corp over unauthorised charges on customers’ cellphone bill, a practice known as cramming.

In a third cramming-related government enforcement action this year, the Consumer Financial Protection Bureau alleges that from 2004 to December 2013, Sprint billed its customers tens of millions of dollars in unauthorised third-party charges while keeping up to 40 percent of the revenue.

The Federal Communications Commission is also weighing a $105 million (67 million pounds) fine against Sprint for charging its customers for services that they had never requested.

The case against Sprint marks the first joint public action by the FCC and the CFPB.

In July, the Federal Trade Commission sued T-Mobile US Inc over similar billing issues and the FCC and the FTC settled such a case with AT&T Inc in October.

The bureau now argues that Sprint failed to properly monitor vendors to whom it had outsourced the processing of Sprint customers’ payments for digital purchases, resulting in illegitimate charges for text message services that many consumers were unaware of. The agency is seeking refunds and penalties.

“We strongly disagree with (CFPB‘s) characterization of our business practices ... Sprint took considerable steps to protect wireless customers from unauthorised third-party billing,” spokeswoman Stephanie Vinge Walsh said in a statement.

“It appears the CFPB has decided to use this issue as the test case on whether it has legal authority to assert jurisdiction over wireless carriers,” she said in an email.

The case is Consumer Financial Protection Bureau v. Sprint Corp, U.S. District Court, Southern District of New York, No. 14-cv-9931.

Reporting by Alina Selyukh, editing by G Crosse

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