The Federal Communications Commission (FCC) may be preparing to fine Sprint a whopping $105 million on allegations that the wireless carrier charged consumers for text message alerts and various other services that they have never signed up for. The move was confirmed by an FCC official whose identity was not revealed.
According to the FCC, Sprint bills its customers for text message alerts, sports scores, horoscopes, ringtones and other services they did not sign up for. Dubbed "cramming," the alleged overbilling of Sprint to its customers is the company's second case with the FCC this year. Back in May, Sprint had to pay $7.5 million to the agency over violations on unsolicited calls. It's not clear whether Sprint has started to negotiate with the FCC to reduce the fine.
Once the case is formally filed and the proposed fine is approved, consumers who believe that they were overcharged by Sprint will be compensated by the carrier. The calculated fine that was charged by the FCC to the carrier is based on the total amount that the agency believes the consumers had been overcharged with.
FCC's decision was based on a three-month period of gathered complaints from the consumers. From August to October 2013, it was said that the carrier received almost 35,000 consumer complaints on unwanted charges. As such, the FCC charges Sprint with willful violation of the rights of consumers.
Sprint, one of the top four wireless carriers in the U.S., revealed an operating loss of $192 million in its latest earnings report. Operating revenue is said to have reached $8.5 billion. One of the carrier's biggest losses is when it was forced to abort its acquisition bid on rival carrier T-Mobile back in August. In the aftermath of the lost bid, Sprint changed its leadership structure by replacing Dan Hesse with a new CEO in the person of Marcelo Claure. Since his appointment, the company has dealt with a protracted and painful restructuring scheme that caused 2,500 employees to be relieved from their jobs.
Apart from building up the case against Sprint, the FCC is also looking into the cramming complaints against the other carriers such as AT&T, Verizon and T-Mobile. State attorneys general have prodded the carriers to agree in November that they would stop billing their customers for third-party services.
It's worth noting that these third-party companies, which had been billing consumers of unwanted charges, are now deemed part of a billion-dollar industry.
The Senate Commerce Committee reported that a large portion of the charges were fake. However, the worst part of the information is the fact that wireless carriers actually keep a portion of the revenue for their sole benefit.
