Sprint Corporation
Documents in this case
- Complaint · · 10 p.
- Complaint · · 10 p.
- Stipulation · · 17 p.
- Stipulation · · 18 p.
Case summary
The Bureau filed a lawsuit against Sprint Corporation for illegally billing wireless consumers tens of millions of dollars in unauthorized third-party charges.
Complaint ()
PDF of this document (10 pages)
Page 2
14 CV 99:
UNITED STATES DISTRICT COURT 4 © G Q 1
SOUTHERN DISTRICT OF NEW YORK
Consumer Financial Protection Bureau, Civil Action No. lant JUDCE PAULEY amtin, COMPLAINT Vv.
Sprint Corporation, — Defendant. Cos 1° 2014 U.S.D.C. S.D.N.Y.
The Consumer Financial Protection Bureau (the “Bureau”) brings this action
against Sprint Corporation (“Sprint”) and alleges as follows: Introduction
1. From 2004 to December 2013, Sprint charged its wireless customers for unauthorized third-party charges. These charges cost Sprint’s customers millions of dollars each year.
2. Sprint unfairly charged its customers by creating a billing and paymentprocessing system that gave third parties virtually unfettered access to its customers’ accounts. This access allowed third parties to “cram” unauthorized charges onto wireless bills.
3. Sprint automatically enrolled customers in its third-party billing system without their knowledge, much less their consent. Many customers were therefore
unaware of the unauthorized charges.
Page 3
4. Sprint continued to operate its flawed system despite numerous red flags, such as high refund rates and complaints from customers, law-enforcement agencies, and consumer groups.
5. Sprint profited from this system because it shifted the risk to its customers, who had to pay third-party charges under the company’s Terms and Conditions of Service (“Terms & Conditions”). While its customers suffered losses, Sprint retained 40% of the gross revenue it collected for third-party charges, totaling hundreds of millions of dollars.
Jurisdiction and Venue
6. This Court has subject-matter jurisdiction over this action because it presents a federal question, 28 U.S.C. § 1331, and is brought by an agency of the United States, 28 U.S.C. § 1345 and 12 U.S.C. § 5565.
7. Venue is proper because Sprint transacts business and has locations in this District. 12 U.S.C. § 5564(f).
Parties
8. The Bureau is an independent agency of the United States charged with regulating the offering and provision of consumer financial products and services under “Federal consumer financial laws.” 12 U.S.C. § 5491(a). The Bureau is authorized to commence civil actions by its own attorneys to address violations of Federal consumer financial laws, including the prohibition on covered persons from engaging in any unfair, deceptive, or abusive act or practice under the Consumer Financial Protection
Act of 2010 (“CFPA”). 12 U.S.C. §§ 5564(a)-(b), 5531, 5536.
Page 4
9. Sprint extends credit to, and processes payments for, consumers in connection with goods and services that Sprint does not directly sell or that consumers do not directly purchase from Sprint. Sprint is therefore a “covered person” under the CFPA. 12 U.S.C. § 5481(6), (15)(A)(i) & (vii).
Factual Background I. Landline Third-Party Billing Transferred to Mobile Phones
10. Inthe 1990s, telephone companies opened their billing platforms to third parties. Although third-party billing transformed telephone carriers into large-scale credit issuers and payment processors, they instituted few, if any, compliance measures to ensure that charges on customer bills were authorized and accurate.
11. By the late 1990s, federal and state authorities realized that nearly all third-party landline charges were unauthorized. In 1998, however, larger telephone companies convinced government authorities to allow the industry to self-regulate through voluntary guidelines.
12. Unauthorized billing not only persisted, but grew after self-regulation. In 2011, the Federal Communications Commission estimated that each year 15-20 million households were harmed by landline cramming. A 2011 report by the Senate Commerce Committee’s staff concluded that about 300 million third-party charges appeared on landline bills each year, totaling more than $2 billion annually.
13. Despite common knowledge that this system invited unauthorized
charges, Sprint replicated the landline, third-party model — outsourcing compliance and
Page 5
billing functions to billing aggregators without adequate oversight — in its wireless business.
II. Unauthorized Charges for Premium Short Messaging Services
14. From about 2004 through 2013, nearly all wireless third-party billing involved goods called “premium text messages” or “premium short messaging services” (“PSMS”) because they were frequently delivered by text messages. The goods included ringtones, wallpaper, and text messages providing flirting tips, horoscopes, and other digital content. Some third-party goods were one-time charges, costing about $0.99 - $4.99. Often, they were monthly subscriptions that cost about $9.99 a month.
15. Merchants typically marketed PSMS products through online advertisements. Customers clicked on ads that brought them to websites asking them to enter their cellphone numbers. Under industry guidelines, the websites were supposed to disclose prices and other terms and conditions, including whether the charges were recurring. After customers entered their cellphone numbers, merchants were supposed to send text messages requesting replies to confirm the purchases. Merchants then delivered the products to the cellphones through Sprint’s network. After customers purportedly received the products, Sprint, relying on information provided by merchants and routed by billing aggregators, placed the charges on customer bills.
16. | Some merchants, however, advertised coupons or free giveaways unrelated. to the digital content they purportedly provided. The false or misleading advertisements tricked customers into entering their cellphone numbers. When a customer received a
text message from the merchant, she responded believing she was going to receive the
Page 6
advertised coupon or free item, when in fact she unwittingly “purchased” a monthly subscription that continued until she canceled the service.
17. | Many times, merchants simply crammed fabricated charges onto Sprint’s bills without sending any communications or delivering any products to customers. The unauthorized charges often continued undetected for many months.
18. | Numerous complaints from Sprint customers, spanning several years, describe how they were victimized by these or similar schemes. The complaints also show that Sprint failed to respond to complaints or provide full refunds.
ItI. Sprint Unfairly Charged Its Customers
19. Sprint unfairly billed its customers for unauthorized PSMS charges by (i) enrolling customers in third-party billing without their authorization; (ii) giving third parties access to its customers and its billing system without implementing adequate compliance controls; (iii) failing to adequately resolve customer disputes; and (iv) ignoring warnings from customers, government agencies, and public-interest groups.
A. Automatic Enrollment
20. Sprint automatically enrolled customers in third-party billing without their consent. This policy helped perpetuate wrongful third-party-billing because many customers did not spot unauthorized charges, as they were unaware that third parties could place charges on their bills.
B. Inadequate Compliance and Controls
21. Sprint selected the merchants permitted to use its system and conducted
some due diligence before onboarding them. It did not, however, directly interact with
Page 7
the merchants. Sprint, for example, did not directly require merchants to (i) obtain customer authorization for purchases; or (ii) comply with industry guidelines. Sprint also did not compile the third-party-billing activity that appeared on the invoices it sent to customers.
22. Sprint outsourced these compliance and payment-processing functions to vendors called billing aggregators without properly overseeing the aggregators. Sprint relied on “compliance with laws” provisions in its agreements with the aggregators, which provided Sprint with breach-of-contract remedies, but did little to protect customers.
23. The lack of oversight created blind spots for Sprint that resulted in numerous unauthorized charges. For example, one of Sprint’s two primary billing aggregators knowingly helped certain merchants cram unauthorized charges onto bills from at least January 2011 to November 2013.
C. Failure to Respond to Customer Complaints
24. When customers contacted Sprint about unauthorized charges, the company often did not adequately resolve the disputes. In some instances, Sprint refused to provide refunds and only offered instructions on how to block future thirdparty charges.
25. Other times, Sprint refused to provide refunds and referred customers to the merchants. Sprint, at times, gave partial refunds or refunds for a few months, but
rarely for all months that the customer incurred the unauthorized charges.
Page 8
D. Failure to Heed Red Flags
26. Sprint ignored, or consciously avoided, numerous red flags highlighting the significant flaws in its third-party-billing system.
27. ‘First, it did not track customer complaints about unauthorized charges. Sprint therefore declined to employ a basic mechanism that could have helped reveal the flaws and risks in its system.
28. Second, in 2010, Sprint settled a law-enforcement action related to wireless cramming with the Florida Attorney General.
29. Third, Sprint continued to outsource payment processing and compliance to billing aggregators after those aggregators agreed to pay claims pursuant to wirelesscramming settlements in 2008 to 2010.
30. Fourth, refund rates for certain merchants ranged from 20-50%. Though extremely high, those rates likely understate the problem because many customers never learned about the unauthorized charges, and when they did, Sprint often refused to give full refunds.
31. Despite the high refunds rates for certain merchants, Sprint rarely terminated their access to its customers and billing system. Rather, after several years with limited compliance measures, Sprint devised a system of financial incentives and penalties to encourage billing aggregators to keep refund rates below certain thresholds. Because billing aggregators received more money if merchants generated more charges, they had an incentive to increase transaction volume, while hiding unauthorized charges
to keep refund rates below the thresholds.
Page 9
IV. Sprint Transferred the Risk and the Harm to Consumers
32. While Sprint outsourced compliance and fraud-prevention, it maintained tight control over the collection, processing, and distribution of payments.
33. | Sprint’s Terms and Conditions did not differentiate between its own charges and those of third parties. Non-payment subjected customers to potential late fees, service termination, collections, and reporting to credit bureaus. Customers had to pay unauthorized third-party charges unless Sprint elected to provide refunds, which it often did not.
34. Sprint reaped lucrative profits from third-party billing. It kept about 40% of the PSMS gross revenue and passed along the remainder to the billing aggregators who shared their portions with the merchants. Sprint’s share of the revenue totaled hundreds of millions of dollars.
Violation of the CFPA
35. The Bureau incorporates the allegations of paragraphs 1-34 of this Complaint.
36. As described above, Sprint’s actions and omissions, including its failure to take reasonable steps to prevent unauthorized charges, caused or were likely to cause substantial injury to consumers that they could not reasonably avoid and were not outweighed by countervailing benefits to consumers or competition.
37- Sprint’s actions and omissions were therefore unfair acts and practices in
violation of §§ 1031 and 1036(a)(1)(B) of the CFPA, 12 U.S.C. §§ 5531 and 5536(a)(1)(B).
Page 10
Demand for Relief
The Bureau requests that the Court:
a. permanently enjoin Defendant from committing future violations of the CFPA;
b. award damages or other monetary relief against Defendant;
Cc. order Defendant to pay restitution to consumers harmed by its unlawful conduct;
d. order disgorgement of ill-gotten revenue against Defendant;
e. impose civil money penalties against Defendant;
f. order Defendant to pay the Bureau’s costs incurred in connection with
prosecuting this action; and g. award additional relief as the Court may determine to be just and proper.
Dated: New York, New York December 17, 2014
Respectfully Submitted,
Anthony Alexis Acting Enforcement Director
Jeffrey Paul Ehrlich Deputy Enforcement Director
Natalie R. Williams Assistant Litigation Deputy
FS
ames Kim — Genessa Stout Enforcement Attorneys
Page 11
CONSUMER FINANCIAL PROTECTION BUREAU 1700 G Street, NW
Washington, DC 20552
Telephone (Kim): 212-328-7013
Telephone (Stout): 202-435-7920
Facsimile: 202-435-7329
e-mail: james.kim @cfpb.gov
e-mail: [email protected]
Counsel for Plaintiff
Complaint ()
PDF of this document (10 pages)
Page 12
Case 3:15-cv-03268-PGS-LHG Document 1 Filed 05/12/15 Page 1 of 10 PageID: 1
Page 13
Case 3:15-cv-03268-PGS-LHG Document 1 Filed 05/12/15 Page 2 of 10 PageID: 2
Page 14
Case 3:15-cv-03268-PGS-LHG Document 1 Filed 05/12/15 Page 3 of 10 PageID: 3
Page 15
Case 3:15-cv-03268-PGS-LHG Document 1 Filed 05/12/15 Page 4 of 10 PageID: 4
Page 16
Case 3:15-cv-03268-PGS-LHG Document 1 Filed 05/12/15 Page 5 of 10 PageID: 5
Page 17
Case 3:15-cv-03268-PGS-LHG Document 1 Filed 05/12/15 Page 6 of 10 PageID: 6
Page 18
Case 3:15-cv-03268-PGS-LHG Document 1 Filed 05/12/15 Page 7 of 10 PageID: 7
Page 19
Case 3:15-cv-03268-PGS-LHG Document 1 Filed 05/12/15 Page 8 of 10 PageID: 8
Page 20
Case 3:15-cv-03268-PGS-LHG Document 1 Filed 05/12/15 Page 9 of 10 PageID: 9
Page 21
Case 3:15-cv-03268-PGS-LHG Document 1 Filed 05/12/15 Page 10 of 10 PageID: 10
Stipulation ()
PDF of this document (17 pages)
Page 22
SED IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY CONSUMER FINANCIAL PROTECTION Civil Action No.
/5 B2t Cj°5) BUREAU, Plaintiff, v.
Stipulated Final Judgment and Order CELLCO PARTNERSHIP d/b/a VERIZON WI RELESS, Defendants.
STIPULATED FINAL JUDGMENT AND ORDER The Consumer Financial Protection Bureau (“Bureau”) commenced this civil action against Defendant Ceilco Partnership d/b/a Verizon Wireless (“Verizon”) on May 12, 2015 to obtain injunctive relief, damages or other monetary relief, civil penalties, and other relief. The Complaint alleges that from 2004 through 2013, Verizon violated Section 1o36(a)(1)(B) of the Consumer Financial Protection Act by charging its wireless customers for unauthorized third-party charges. ‘The Bureau and Verizon, by and through their respective counsel, have requested that the Court enter this Stipulated Final Judgment and Order (“Order”). FINDINGS This Court has jurisdiction over the parties and the subject matter of this action.
Case 3:15-cv-03268-PGS-LHG Document 8 Filed 06/09/15 Page 1 of 17 PageID: 55
Page 23
2.
The Bureau and Verizon agree to the entry of this Order, without adjudication of any issue of fact or law, to settle and resolve all matters in this dispute arising from the conduct alleged in the Complaint to the date this Order is entered. 3.
Verizon neither admits nor denies any allegations in the Complaint, except as specifically stated in this Order. For purposes of this Order, Verizon admits to the facts necessary to establish the Court’s jurisdiction over Verizon and the subject matter of this action.
4.
Verizon waives all rights to seek judicial review or otherwise challenge or contest the validity of this Order. Verizon also waives any claim it may have under the Equal Access to Justice Act, 28 U.S.C. § 2412, concerning the prosecution of this action to the date of this Order. Each party will bear its own costs and expenses, including without limitation, attorneys’ fees.
5.
Entry of this Order is in the public interest.
DEFINITIONS The following definitions apply to this Order:
6.
“Account Holder” means any individual or entity who is or was responsible for paving all charges associated with all lines on that individual’s or entity’s mobile phone account with Verizon.
7.
“Bill” means a Consumer’s mobile telephone bill or prepaid mobile account, as applicable.
8.
“Block” means a restriction placed on a Consumer’s account that prevents one or more lines from being used to purchase Third-Party Products and from being billed for Third-Parts’ Charges on a Consumer’s Bill or Prepaid Account. Case 3:15-cv-03268-PGS-LHG Document 8 Filed 06/09/15 Page 2 of 17 PageID: 56
Page 24
9.
A statement is “Clear and Conspicuous” if it is disclosed in such size, color, contrast, location, duration, and audibility that it is readily noticeable, readable, understandable, and capable of being heard. A statement may not contradict or be inconsistent with any other information with which it is presented. If a statement materially modifies, explains, or clarifies other information with which it is presented, then the statement must be presented in proximity to the information it modifies, explains, or clarifies in a manner that is readily noticeable, readable, and understandable, and not obscured in any manner. In addition: i.
An audio disclosure must be delivered in a volume and cadence sufficient for a Consumer to hear and comprehend it; ii.
A television or internet disclosure must be of a type size, location, and shade and remain on the screen for a duration sufficient for a Consumer to read and comprehend it based on the medium being used; iii.
Disclosures in a print advertisement or promotional material, including but without limitation a point-of-sale display or brochure materials directed to Consumers, must appear in a type size, contrast, and location sufficient for a Consumer to read and comprehend it; and iv.
A text-message disclosure must be of a format, to the extent controlled by the sender, so that Consumers can notice and read it on their mobile devices, and hvperlinks included as part of the text message should be clearly labeled or described.
10.
“Commercial PSMS” means the use of PSMS to bill for Third-Party Products.
Case 3:15-cv-03268-PGS-LHG Document 8 Filed 06/09/15 Page 3 of 17 PageID: 57
Page 25
11.
“Consumer” means a current or former Verizon customer, subscriber, or purchaser of Third-Party Products for which Third-Party Charges are or were placed on the Consumer’s Bill or Prepaid Account, whether that person is the individual responsible for paving the Bill or Prepaid Account, or has a device that is billed to a shared account. “Consumer” does not include any business entity or any state, federal, local, or other governmental entity, if (i) the business entity or government, and not the employees or individuals working for or with that business entity or government, is solely liable to Verizon for payment of all charges placed on that account, and (2) the ability to process Third-Party Charges through that account is not available unless the business entity or government affirmatively requests that certain or all mobile devices be provided the ability to authorize placement of such Third-Party Charges. 12.
“Consumer Redress Period” or “Redress Period” means the period beginning on May 12, 2Ol5and ending March 31, 2016. 13.
“Effective Date” means the date that this Order is entered by this Court. 14.
“Enforcement Director” means the Assistant Director of the Office of Enforcement for the Consumer Financial Protection Bureau, or his delegate. 15.
“Express Informed Consent” means an affirmative act or statement giving unambiguous assent to be charged for the purchase of a Third-Party Product that is made by a Consumer after being provided a Clear and Conspicuous disclosure of material facts.
i6.
“Newly Acquired Entities” means any entities Verizon acquires in the future.
17.
‘Participating States” means Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Flawaii, Idaho, Illinois, Case 3:15-cv-03268-PGS-LHG Document 8 Filed 06/09/15 Page 4 of 17 PageID: 58
Page 26
Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, Wyoming, and the District of Columbia.
i8.
“Premium Short Messaging Service” or “PSMS” means a service that distributes paid content to a Consumer using the Short Message Service and Multimedia Ivlessaging Service communication protocols via messages that are routed using a Short Code, resulting in a Third-Party Charge.
19.
“Prepaid Account” means a Consumer’s account for wireless service where funds first must be applied to the account, and usage charges deducted from those funds.
20, “Related Consumer Action” means a private action filed in court or before an arbitral body by or on behalf of one or more consumers or an enforcement action by another government agency brought against Verizon based on substantially the same facts as described in the Complaint. For purposes of this Order, the Assurances of Discontinuance entered into by Verizon and the Participating States and the Federal Communications Commission (“FCC”) Order are not Related Consumer Actions. 21.
“Short Code” means a common code leased from the CT1A Common Short Code Administration that is comprised of a set of numbers, usually 4 to 6 digits, which text messages can be sent to and received from using a mobile telephone. 22.
“Third Party” means an entity or entities, other than Verizon, that provide a Third-Party Product to Consumers for which charges are placed on Bills. Case 3:15-cv-03268-PGS-LHG Document 8 Filed 06/09/15 Page 5 of 17 PageID: 59
Page 27
23.
“Third-Party Charge” means a charge for the purchase of a Third-Party Product placed on a Consumer’s Bill.
24.
“Third-Party Product” means content or services offered or sold by a Third Party that can be used on a mobile device, for which charges are placed on the Consumer’s Bill or deducted from a Prepaid Account by Verizon. “Third-Party Product” excludes contributions to charities, candidates for public office, political action committees, campaign committees, campaigns involving a ballot measure, or other similar contributions. “Third-Party Product” also excludes white label products and co branded or co-marketed products where goods and services are offered or sold jointly and cooperatively by Verizon and a Third Party, where the charge for such goods or services is placed on the Consumer’s Bill; and where Verizon is responsible for accepting complaints, processing refunds, and other communications with the Consumer regarding the charge. “Third-Party Product” also excludes equipment protection services, including mobile device insurance and extended warranty offerings. 25.
“Unauthorized Third-Party Charge” means a Third-Party Charge placed on a Consumer’s Bill or deducted from a Prepaid Account without the Consumer’s Express Informed Consent.
26.
“Verizon” means Ceilco Partnership d/b/a Verizon Wireless, including all successors and assigns.
Case 3:15-cv-03268-PGS-LHG Document 8 Filed 06/09/15 Page 6 of 17 PageID: 60
Page 28
ORDER I.
Conduct Provision 27.
Commercial PSMS: Verizon will not make available to Consumers the option to purchase rfhirdpart,7 Products through Commercial PSMS or bill charges for Commercial PSMS.
II.
Compliance 28.
Authorization of Third-Party Charges: Verizon will obtain Express Informed Consent before a Consumer is charged for any Third-Party Charge or before funds are deducted from a Prepaid Account. The Consumer’s Express Informed Consent may be provided to Verizon or to another person or entity obligated to Verizon to obtain such consent. Verizon or the other person or entity obligated to obtain such consent will retain sufficient information to allow such consent to be verified. If Express Informed Consent is not directly collected by Verizon, Verizon will implement reasonable policies and practices to confirm that Express Informed Consent will be appropriately collected and documented by the person or entity obligated to do so, and will monitor and enforce those policies and practices to confirm that Express Informed Consent is appropriately collected and documented, and where Express Informed Consent has not been appropriately collected and documented, will require remedial action (which may include, for example. suspension, proactive credits, or retraining), or cease billing for such charges. For purposes of §11, for charges incurred through operating system storefronts, such reasonable policies and practices may, for example, consist of Verizon or its agents making a statistically valid random sample of purchases to demonstrate whether the storefront is collecting Express Informed Consent consistent with this Order. Such policies and practices will be fully implemented by Verizon no later than Case 3:15-cv-03268-PGS-LHG Document 8 Filed 06/09/15 Page 7 of 17 PageID: 61
Page 29
July 1, 2015. While the system described by this Paragraph is being developed and implemented, Verizon will take reasonable steps to obtain Express Informed Consent before a Consumer is billed for any Third-Party Charge. 29.
Purchase Confirmationfor Third-Party Charges: Beginning no later than July 1, 2015, Verizon will implement a system whereby the Consumer (and, for multiline accounts, the Account Holder, if designated) will be sent a purchase confirmation, separate from the Bill of every Third-Party Charge, including recurring charges, that will appeal’ on his or her Bill. Such purchase confirmation will be sent within a reasonable time following the purchase of a Third-Party Product or the recurrence of a Third-Party Charge, and will identify Blocking options that Verizon makes available to Consumers or provides access to such information or both. For multiline accounts, Verizon may provide the Account flolder the option to elect not to receive such purchase confirmations for purchases made on other lines.
30.
Information on Blocking: Beginning no later than July 1, 2015, Verizon i.
At no charge to the Consumer, offer Blocking of Third-Party Charges; and ii.
Provide a Clear and Conspicuous disclosure about Third-Party Charges and Blocking options in informational material provided to Consumers at oi’ near the time of subscribing to or activating service, and in the case of postpaid service which is provided in a context separate from the actual subscriber agreement document and in the case of prepaid service, is included in the disclosures provided at the time of purchase. Such disclosure will include or provide access to a description of Third-Party Charges, how Third-Party Charges Case 3:15-cv-03268-PGS-LHG Document 8 Filed 06/09/15 Page 8 of 17 PageID: 62
Page 30
appear on Bills and Prepaid Accounts, and options available to Consumers to Block Third-Party Charges. Consumers will not incur any data or text charges for receiving or accessing the information discussed in this Paragraph. 31.
Billing Information and Format: No later than September 1, 2015: i.
Except for Prepaid Accounts, all Third-Party Charges will be presented in a dedicated section of the Consumer’s Bill (or in a dedicated section for each mobile line on the account, if the Bill sets forth charges by each line) and will all be set forth in such a manner as to distinguish the Third-Party Charges contained therein from Verizon’s service, usage, and other charges. This section of the Consumer’s Bill will contain a heading that Clearly and Conspicuously identifies that the charges are for Third-Party Products; and ii.
The Third-Party Charge billing section required by this ¶1 31 will include a Clear and Conspicuous disclosure of a Consumer’s ability to Block Third-Party Charges, including contact or access information that Consumers may use to initiate such Blocking. If Verizon includes a Third-Party Charge billing section for each mobile line on the account, Verizon will have the option to include the disclosure of a Consumer’s ability to Block Third-Party Charges in only the first Third-Party Charge billing section that appears on the Bill, rather than in all Third-Party Charge hilling sections. 32.
Consumer Contacts: When a Consumer contacts Verizon with regard to a Third-Party Charge incurred after the Effective Date, or a Block, Verizon will: i.
Provide the Consumer with access to a customer service representative who has access to the Consumer’s account information for at least the prior 12 months;
Case 3:15-cv-03268-PGS-LHG Document 8 Filed 06/09/15 Page 9 of 17 PageID: 63
Page 31
ii.
beginning no later than September 15, 2015, for any Consumer who claims he or she did not authorize a Third-Party Charge incurred after the Effective Date:
1.
For disputed Third-Party Charges (either a single charge or a recurring charge) initially incurred within the prior 12 months, either (i) provide the Consumer a full refund or credit of any and all disputed Third-Party Charges not previously credited or refunded to the Consumer, or (2) deny a refund if Verizon has information demonstrating that the Consumer provided Express Informed Consent to the Third-Party Charge, offers to provide such information to the Consumer, and, upon request, provides such information to the Consumer. 2.
For disputed Third-Party Charges (either a single charge or a recurring charge) initially incurred more than 12 months prior to when the Consumer contacted Verizon, within 10 business days from receipt of the claim, either (i) provide the Consumer a full refund or credit of any and all disputed Third-Party Charges not previously credited or refunded to the Consumer, or (2) deny a refund if Verizon has information demonstrating that the Consumer provided Express Informed Consent to the Third-Party Charge, offers to provide such information to the Consumer, and, upon request, provides such information to the Consumer. This subparagraph 32(ii)(2) will expire 4 years from the Effective Date.
iii.
if the Consumer claims that he or she did not authorize a Third Party Charge, and the Consumer is a current customer of Verizon, offer the Consumer the opportunity to Block future Third-Party Charges; Case 3:15-cv-03268-PGS-LHG Document 8 Filed 06/09/15 Page 10 of 17 PageID: 64
Page 32
iv.
not require the Consumer to first contact the Third Party in order to icceive a refund or a credit of any claimed Unauthorized Third-Party Charge, although this subparagraph does not prohibit asking the Consumer if he or she has contacted the Third Party or if the Consumer has already received a credit or refund from the Third Party for some or all of the claimed Unauthorized Third Party Charge.
33.
Training: Verizon will, for at least 6 years from the Effective Date, conduct a training program with its customer service representatives, at least annually, to administer the requirements of this Order. To the extent that Verizon no longer permits Third-Party Charges on Consumers’ Bill or the deduction of Third-Party Charges on Consumers’ Prepaid Accounts, Verizon will conduct one training program within 3 months of such cessation and will have no further obligation to conduct training programs under this Paragraph.
III.
Redress 34.
Verizon or Verizon’s agent will administer redress to Consumers subject to Bureau oversight.
35.
Verizon submitted to the Enforcement Director for review and nonobjection a comprehensive written plan for providing redress consistent with this Order (“Consumer Redress Plan”). The Enforcement Director has made a determination of nonobjection to the Consumer Redress Plan. Verizon must implement and adhere to the steps, recommendations, deadlines, and timeframes outlined in the Consumer Redress Plan.
36.
Verizon will provide refunds under the Consumer Redress Plan of at least $35,000,000, not to exceed $70,000,000 (the “Redress Amount”), to all Consumers Case 3:15-cv-03268-PGS-LHG Document 8 Filed 06/09/15 Page 11 of 17 PageID: 65
Page 33
entitled to a refund. Once Verizon pays at least $35,000,000 in refunds to Consumers, Verizon may claim a $i6,000,ooo credit for refunds previously paid to Consumers by Verizon. If the Redress Amount still has not been exhausted after the $i6,000,000 credit for refunds is applied, Verizon may claim an additional S,ooo,ooo credit for costs associated with administering redress to Consumers. 37.
At the end of the Consumer Redress Period, after completing the Consumer Redress Plan, and after claiming the credits described in ¶1 36, if the Redress Amount has not been exhausted, Verizon will pay to the Bureau or the Bureau’s agent, by wire transfer, and according to the Bureau’s wiring instructions, the remaining Redress Amount.
38.
If the Bureau determines, in consultation with the Participating States and the FCC, that additional redress to Consumers is wholly or partially impracticable or otherwise inappropriate, or if funds remain after additional redress is completed, the Bureau, in its sole discretion may apply any remaining funds for such other equitable relief, including consumer information remedies, as determined by the Bureau to be reasonably related to the violations described in the Complaint. Any funds not used for such equitable relief will be deposited in the U.S. Treasury as disgorgement. Verizon will have no right to challenge any actions that the Bureau or its representatives may take under this Paragraph.
39.
Verizon may not condition the payment of redress to any Consumer under this Order on that Consumer waiving any right.
IV.
Additional Monetary Provisions 40.
In the event of any default on Verizon’s obligations to make payment under this Order, interest, computed under 28 U.S.C. § 1961, as amended, will accrue on Case 3:15-cv-03268-PGS-LHG Document 8 Filed 06/09/15 Page 12 of 17 PageID: 66
Page 34
any outstanding amounts not paid from the date of default to the date of payment, and will immediately become due and payable.
41.
Under 31 U.S.C. § 7701, Verizon, unless it already has done so, must furnish to the Bureau its taxpayer identifying numbers, which may be used for purposes of collecting and reporting on any delinquent amount arising out of this Order. 42.
Within 30 days of the entry of a final judgment, consent order, or settlement in a Related consumer Action, Verizon must notify the Enforcement Director of the final judgment, consent order, or settlement in writing. That notification must indicate the amount of redress, if any, that Verizon paid or is required to pay to consumers and describe the consumers or classes of consumers to whom that redress has been or will be paid.
V.
Reporting Requirements 43.
Verizon must notify the Bureau of any development that may affect its compliance obligations arising under this Order, including but not limited to a dissolution, assignment, sale, merger, or other action that would result in the emergence of a successor company; the creation or dissolution of a subsidiary or parent that engages in any acts or practices subject to this Order, the filing of any bankruptcy or insolvency proceeding by or against Verizon; or a change in Verizon’s name or address. Verizon must provide this notice at least 30 days before the development or as soon as practicable after the learning about the development, whichever is sooner. 44.
Verizon designates the following points of contact, which the Bureau may use to communicate with Verizon regarding this Order: Case 3:15-cv-03268-PGS-LHG Document 8 Filed 06/09/15 Page 13 of 17 PageID: 67
Page 35
Michelle L. Rogers BuckleySandler LLP 1250 24th Street NW Suite 700 Washington, DC 20037 mrogers bucklevsandler.corn Robert L. Ernst Verizon Wireless One Verizon Way VC54N068 Basking Ridge, NJ 07920 Robert.1.ernst@)verizon.corn 45.
The Bureau, in consultation with the FCC and the Participating States, may engage a third-party independent auditor (“Auditor”), which will not be a governmental entity, to review and report on administration of the Consumer Redress Plan. Verizon will provide all records and information requested by the Auditor, and will require any third-parties it engages to administer the program to also do so. Upon the Auditor’s request, Verizon may share any Consumer information relating to a r[hird Party Charge with the Auditor. The cost of the Auditor’s review will be paid from the Redress Amount.
VI.
Order Distribution and Acknowledgment 46.
Within 30 days of the Effective Date, Verizon must deliver a copy of this Order to each of Verizon’s board members and executive officers. 47.
For 5 years from the Effective Date, Verizon must deliver a copy of this Order to any business entity resulting from any change in structure described in § V, any future board members and executive officers before they assume their responsibilities. 48.
Verizon must secure a signed and dated statement acknowledging receipt of a copy of this Order, ensuring that any electronic signatures comply with the Case 3:15-cv-03268-PGS-LHG Document 8 Filed 06/09/15 Page 14 of 17 PageID: 68
Page 36
requirements of the E-Sign Act, 15 U.S.C. § 7001 et seq., within 30 days of delivery, from all persons receiving a copy of this Order under this Section. VII.
Recordkeeping 49.
Verizon must create and maintain for 5 years from the Effective Date all documents and records necessary to demonstrate full compliance with each provision of this Order, including all submissions to the Bureau. VIII. Notices 50.
Unless otherwise directed in writing by the Bureau, Verizon must provide all submissions, requests, communications, or other documents relating to this Order in writing, with the subject line, Ce/leo Partnership d/b/a Verizon Wireless, Case no. 15cv-3268 and send them to:
Assistant Director for Enforcement Consumer Financial Protection Bureau ATTN: Office of Enforcement 1700 G Street, NW Washington, DC 20552 Enforcement Comp1iancecfpb.gov I.
Cooperation with the Bureau 51.
Verizon must cooperate fully to help the Bureau determine the identity and location of, and the amount of injury sustained by, each Consumer. Verizon must provide such information in its or its agents’ possession or control within 14 business days of receiving a written request from the Bureau. II.
Compliance Monitoring 52.
Within 14 business days of receipt of a written request from the Bureau, Verizon must submit additional compliance reports or other requested information, Case 3:15-cv-03268-PGS-LHG Document 8 Filed 06/09/15 Page 15 of 17 PageID: 69
Page 37
which must be made under penalty of perjury; provided sworn testimony; or produce documents.
53.
Verizon must permit Bureau representatives to interview any employee or other person affiliated with Respondent who has agreed to such an interview regarding the subject matter of this action. The person interviewed may have counsel present. 54.
Nothing in this Consent Order will limit the Bureau’s lawful use of civil investigative demands under 12 C.F.R. § io8o.6 or other compulsory process. III.
Release Bureau releases and discharges Verizon from all potential liability for law violations that the Bureau has or might have asserted based on the practices alleged in the Complaint, to the extent such practices occurred before the Effective Date and the Bureau knows about them as of the Effective Date. The Bureau may use the practices alleged in the Complaint in future enforcement actions against Verizon or its affiliates to establish a pattern or practice of violations or the continuation of a pattern or practice of violations or to calculate the amount of any penalty. This release does not preclude or affect any right of the Bureau to determine and ensure compliance with this Order, or to seek penalties for any violations of this Order.
TV.
Modifications to Non-Material Requirements 56.
Verizon may seek a modification to non-material requirements of this Order (e.g., reasonable extensions of time and changes to reporting requirements) by submitting a written request to the Enforcement Director. V.
Retention of Jurisdiction 57.
The Court will retain jurisdiction of this matter for purposes of construction, modification, and enforcement of this Order. i6 Case 3:15-cv-03268-PGS-LHG Document 8 Filed 06/09/15 Page 16 of 17 PageID: 70
Page 38
IT IS SO ORDERED.
Dated this L± day of , 2015 United States District Court Judge Case 3:15-cv-03268-PGS-LHG Document 8 Filed 06/09/15 Page 17 of 17 PageID: 71
Stipulation ()
PDF of this document (18 pages)
Page 39
CASS AC OROAT WHE BOSHMER es FROG AS bage 4 +41
USDC SDNY DOCUMENT ELECTRONICALLY FILED DOC #:
UNITED STATES DISTRICT COURT DATE FILED: 6/40/(€ SOUTHERN DISTRICT OF NEW YORK a Consumer Financial Protection Bureau, Civil Action No. 14-cv-09931 Plaintiff, Stipulated Final Judgment and Order v.
Sprint Corporation,
Defendant.
STIPULATED FINAL JUDGMENT AND ORDER
action against Defendant Sprint Corporation (“Sprint”) on December 17, 2014 to obtain injunctive relief, damages or other monetary relief, civil penalties, and other relief. The Complaint alleges that from 2004 through 2013, Sprint violated Section 1036(a)(1)(B) of the Consumer Financial Protection Act by charging its wireless customers for unauthorized third-party charges.
The Bureau and Sprint, by and through their respective counsel, have requested that the Court enter this Stipulated Final Judgment and Order (“Order”).
FINDINGS 1. This Court has jurisdiction over the parties and the subject matter of this
action.
Page 40
Case 1:14-cv-09931-WHP Document 25, Filed 06/30/15 Page 2 of 18 ase Seaat WHE Document 15-2 Filed anata page 3 of 19
2. The Bureau and Sprint agree to the entry of this Order, without adjudication of any issue of fact or law, to settle and resolve all matters in this dispute arising from the conduct alleged in the Complaint to the date this Order is entered.
3. Sprint neither admits nor denies any allegations in the Complaint, except as specifically stated in this Order. For purposes of this Order, Sprint admits to the facts necessary to establish the Court’s jurisdiction over Sprint and the subject matter of this action.
4. Sprint and the Bureau waive all rights to seek judicial review or otherwise challenge or contest the validity of this Order. Sprint also waives any claim it may have under the Equal Access to Justice Act, 28 U.S.C. § 2412, concerning the prosecution of this action to the date of this Order. Each party will bear its own costs and expenses, including without limitation attorneys’ fees.
5. Entry of this Order is in the public interest.
DEFINITIONS The following definitions apply to this Order:
6. “Account Holder” means any individual or entity who is or was responsible for paying all charges associated with all lines on that individual’s or entity’s mobile phone account with Sprint.
7. “Block” means a restriction placed on a Consumer’s account that prevents one or more lines from being used to purchase Third-Party Products and from being charged for Third-Party Charges on a Consumer’s Mobile Telephone Bill or
Prepaid Account.
Page 41
1-WHP Document 25_ Filed 06/30/15 Page 3 of 18 1-WHP Document 15-2 Filed 05/15/15 Pave 40 19
8. A statement is “Clear and Conspicuous’ if it is disclosed in such size, color, contrast, location, duration, or audibility that it is readily noticeable, readable, understandable, or capable of being heard. A statement may not contradict or be inconsistent with any other information with which it is presented. If a statement materially modifies, explains, or clarifies other information with which it is presented, then the statement must be presented in proximity to the information it modifies, explains, or clarifies in a manner that is readily noticeable, readable, and understandable, and not obscured in any manner. In addition:
i. An audio disclosure must be delivered in a volume and cadence sufficient for a Consumer to hear and comprehend it;
ii. A television or internet disclosure must be of a type size, location, and shade and remain on the screen for a duration sufficient for a Consumer to read and comprehend it;
iii. Disclosures in a print advertisement or promotional material, including but without limitation, a point-of-sale display or brochure materials directed to Consumers, must appear in a type size, contrast, and location sufficient for a Consumer to read and comprehend it; and
iv. A text-message disclosure must be of a type size and format so that Consumers can notice, read and comprehend the message on their mobile device. 9. “Commercial PSMS” means the use of PSMS to charge for Third-Party
Products.
Page 42
1-WHP Document 25_ Filed O6/30119 Pa e dot 18 T-WHP Document 15-2 Filed 05 4 5 of 19
10. “Consumer” means a current or former Sprint Account Holder or other authorized subscriber for which Third-Party Charges are or were placed on the Consumer’s Mobile Telephone Bill or Prepaid Account, whether that person is the individual responsible for paying the Mobile Telephone Bill or Prepaid Account, or has a device that is billed to a shared account, or is otherwise authorized to incur charges on the account. “Consumer” does not include any business entity or any state, federal, local, or other governmental entity, if (4) the business entity or government, and not the employees or individuals working for or with that business entity or government, is solely liable to Sprint for payment of all charges placed on that account, and (2) the ability to process Third-Party Charges through that account is not available unless the business entity or government affirmatively requests that certain or all mobile devices be provided the ability to authorize placement of such Third-Party Charges.
11. “Effective Date” means the date that this Order is entered by this Court.
12. “Enforcement Director” means the Assistant Director of the Office of Enforcement for the Consumer Financial Protection Bureau, or his delegate.
13. “Express Informed Consent” means an affirmative act or statement giving unambiguous assent to be charged for the purchase of a Third-Party Product that is made by a Consumer after receiving a Clear and Conspicuous disclosure of material facts.
14. “Mobile Telephone Bill” means a Consumer’s paper or electronic
monthly statement of charges for Sprint postpaid wireless service.
Page 43
Case 1:14-cv-09931-WHP Document 25. Filed 06/30/15 Page 5o Ly BBSS WHE Bose ent Ae oe ORES Page 8 Sf 18
15. “Newly Acquired Entities” means any entity or entities Sprint acquires in the future. ,
16. “Participating States” means: Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, Wyoming, and the District of Columbia.
17. “Premium Short Messaging Service” or “PSMS” means a service that distributes paid content to a Consumer using the Short Message Service and Multimedia Messaging Service communication protocols via messages that are routed using a Short Code, resulting in a Third-Party Charge.
18. “Prepaid Account” means a Consumer’s account for wireless service where funds first must be applied to the account and usage deducts from those funds.
19. “Related Consumer Action” means a private action by or on behalf of one or more consumers or an enforcement action by another government agency brought against Sprint based on substantially the same facts as described in the Complaint. Actions asserted in small claims court or individual arbitrations are not considered Related Consumer Actions. For purposes of this Order, the Assurances of
Discontinuance entered into with the Participating States and the Consent Decree
Page 44
ne == TL UU we)
ocument 25 Filed 06/30/15. Page 6 of 18 ocument 15-2 Fileq 05/15/15 page 7
entered into with the Federal Communications Commission are not considered a Related Consumer Action.
20. “Redress Period” means the period during which redress is administered beginning on the date this settlement is publicly announced and ending on May 1, 2016.
21. “Short Code” means a common code leased from the CTIA Common Short Code Administration that is comprised of a set of numbers, usually 4 to 6 digits, which text messages can be sent to and received from using a mobile telephone.
22, “Sprint” means Sprint Corporation, including all of Sprint’s affiliates, subsidiaries, successors, and assigns.
23. “Third Party” means an entity or entities, other than Sprint, that provide a Third-Party Product to Consumers for which charges are made through Sprint’s Mobile Telephone Bills or deducted from Prepaid Accounts.
24. “Third-Party Charge” means a charge for the purchase of a Third-Party Product placed on a Consumer’s Mobile Telephone Bill or deducted from a Prepaid Account.
25. “Third-Party Product” means content or services provided by a Third Party that can be used on a Consumer’s mobile device for which charges are placed on the Consumer’s Mobile Telephone Bill or deducted from a Prepaid Account by Sprint. “Third-Party Product” excludes contributions to charities, candidates for public office, political action committees, campaign committees, campaigns involving a ballot
measure, or other similar contributions. “Third-Party Product” also excludes co-
Page 45
(@) feb) (op) iq) re | ee = (@) < ‘o) CO CO (oe) a a “oU oo)
Soumsit fo-2 "isd Obras age 8 of 18
branded and white label products where content and services are sold jointly and cooperatively by Sprint and another entity, where the content or services are placed on the Consumer’s Mobile Telephone Bill as a Sprint charge or deducted from a Prepaid Account, and Sprint is responsible for accepting complaints, processing refunds, and other communications with the Consumer regarding the charge. “Third-Party Product” also excludes handset insurance, extended warranty offerings, and collect calling services.
26. “Unauthorized Third-Party Charge” means a Third-Party Charge placed on a Consumer’s Mobile Telephone Bill or deducted from a Prepaid Account without the Consumer’s Express Informed Consent.
ORDER I. Conduct Provision
27, Commercial PSMS: Sprint will not make available to Consumers the option to purchase Third-Party Products through Commercial PSMS or bill charges for Commercial PSMS.
II. Compliance
28. Authorization of Third-Party Charges: Sprint will begin developing and implementing a system, which will be fully implemented by Sprint no later than September 15, 2015, to obtain Express Informed Consent before a Consumer is charged for any Third-Party Charge or before funds are deducted from a Prepaid Account. The Consumer's Express Informed Consent may be provided to Sprint or to another person
or entity obligated to Sprint to obtain such consent. Sprint or the other person or entity
Page 46
Case TAC OOST WH Bocument 2 Mich srions Page 8 of 18
obligated to obtain such consent will retain sufficient information to allow such consent to be verified. If Express Informed Consent is not directly collected by Sprint, Sprint will implement reasonable policies and practices to confirm that Express Informed Consent will be appropriately collected and documented by the person or entity obligated to do so, and will monitor and enforce those policies and practices to confirm that Express Informed Consent is appropriately collected and documented, and where Express Informed Consent has not been appropriately collected and documented, will require remedial action (which may include, for example, suspension, proactive credits, or retraining), or cease billing for such charges on Mobile Telephone Bills or Prepaid Accounts. While the system described by this Paragraph is being developed and implemented, Sprint will take reasonable steps to obtain Express Informed Consent before a Consumer is charged for any Third-Party Charge. For purposes of this Paragraph, for charges incurred through operating system storefronts, such reasonable policies and practices may, for example, consist of Sprint or its agents making a statistically valid random sample of purchases to demonstrate whether the storefront is collecting Express Informed Consent consistent with this Order. Such Express Informed Consent will be kept for 5 years, consistent with {| 45.
29. Purchase Confirmation for Third-Party Charges: Beginning no later than September 15, 2015, Sprint will implement a system whereby the Consumer (and, for multiline accounts, the Account Holder, if designated) will be sent a purchase confirmation, separate from the Mobile Telephone Bill or Prepaid Account, of every
Third-Party Charge, including recurring charges, that will appear on his or her Mobile
Page 47
B88 PEA A-OSSSWE DoeeNP LS [Fea OBESE PAH 1 G78
Telephone Bill or be deducted from his or her Prepaid Account. Any such purchase
confirmation will be sent within a reasonable time following the purchase of a Third-
Party Product or the recurrence of a Third-Party Charge, and will identify Blocking
options that Sprint makes available to Consumers or provide access to such information
in a form or format that makes such information Clear and Conspicuous. For multiline
accounts, Sprint may provide the Account Holder the option to elect not to receive such
purchase confirmations.
will:
30. Information on Blocking: Beginning no later than June 1, 2015, Sprint
1. At no charge to the Consumer, offer Blocking of Third-Party
Charges; and
ii. Provide a Clear and Conspicuous disclosure about Third-Party Charges and Blocking options in informational material provided at or near the time of subscribing to service, and in the case of postpaid service which is provided in a context separate from the actual subscriber agreement document, and in the case of prepaid service, is included in the disclosures provided at the time of purchase. Such disclosure will include a description of Third-Party Charges, how Third-Party Charges appear on Mobile Telephone Bills and Prepaid Accounts, and options available to Consumers to Block Third-Party Charges. Consumers will not incur any data or text charges when Sprint provides the disclosure discussed in this Paragraph.
31. Billing Information and Format: No later than the Effective Date:
Page 48
CARMEN RABAT WHE BSEHINEN feo THREPOSR RI PAE 19 BF 18
i All Third-Party Charges will be presented in a dedicated section of the Consumer’s Mobile Telephone Bill (or in a dedicated section for each mobile line on the account, if the Mobile Telephone Bill sets forth charges by each line) and will all be set forth in such a manner as to distinguish the Third-Party Charges contained therein from Sprint’s service, usage, and other charges. This section of the Consumer’s Mobile Telephone Bill will contain a heading that Clearly and Conspicuously identifies that the charges are for Third-Party Products; and
ii. The Third-Party Charge billing section required by this Paragraph will include a Clear and Conspicuous disclosure of a Consumer’s ability to Block Third-Party Charges, including contact or access information that Consumers may use to initiate such Blocking. If Sprint includes a Third-Party Charge billing section for each mobile line on the account, Sprint will have the option to include the disclosure of a Consumer’s ability to Block Third-Party Charges in only the first Third-Party Charge billing section that appears on the Mobile Telephone Bill, rather than in all Third-Party Charge billing sections.
32. Consumer Contacts: When a Consumer contacts Sprint with regard to a Third-Party Charge or a Block, Sprint will:
1. Provide the Consumer with access to a customer-service representative who will have access to the Consumer’s account information for at
least the prior 12 months.
Page 49
AST ATNABSAEWHE BSSuMEN feo TERPS FACE 12 Bt 18
il. Offer the Consumer the opportunity to Block future Third-Party Charges at no charge to the Consumer if the Consumer is a current customer of Sprint;
iil. Provide the Consumer a full refund or credit of all Third-Party Charges the Consumer claims that he or she did not authorize. Sprint may deny a refund under this Paragraph if:
1. Sprint has information demonstrating that the Consumer provided Express Informed Consent to the Third-Party Charge, offers to provide such information to the Consumer, and, upon request, provides such information to the Consumer;
2. The last disputed Third-Party Charge for the particular Third-Party Product at issue (either a single charge or a recurring charge) was incurred more than 3 months prior to when the Consumer contacted Sprint and Sprint is in compliance with 4 29 with respect to the charge; or
3. The Consumer has already received a credit or refund for the disputed Third-Party Charge, and, upon request, Sprint provides such information to the Consumer.
iv. If the Consumer is not satisfied with the relief obtained under the process contained in § 32.iii Sprint will:
1. Offer the Consumer the opportunity to receive a full refund if the Consumer submits his or her request in writing via U.S. Mail, email, or
web-based form affirming that he or she did not authorize such charge,
il
Page 50
Case 1;14-cv-09931-WHP Document 25 | Filed 06/30/15. Page 12 of 18 Case 1:14-cv-O9931-WHP Document 15-2 Filed 05/1 13 of 19
and provide such refund unless Sprint can demonstrate fraud, misrepresentation in connection with the claim, or that the Consumer provided Express Informed Consent. Sprint will accept requests for refunds as described in { 32.iv via U.S. Mail, email, and web-based form. 2, Paragraph 32.1v. will expire 4 years from the Effective Date. v. Beginning no later than the Effective Date, not require the Consumer to first contact the Third Party in order to receive a refund or credit of any claimed Unauthorized Third-Party Charge, although this Paragraph does not prohibit asking the Consumer if he or she has contacted the Third Party and if the Consumer has already received a credit or refund from the Third Party for some or all of the claimed Unauthorized Third-Party Charge; and vi. In the event a Consumer disputes a Third-Party Charge as unauthorized not:
1. Require the Consumer to pay the disputed Third-Party Charge, including any related late charge or penalty; 2. Send the disputed Third-Party Charge to collection; 3. Make any adverse credit report based on nonpayment of the disputed Third-Party Charge; or 4. Suspend, cancel, or take any action that may adversely affect the Consumer’s mobile telephone service or functionality for any reason
related to non-payment of the disputed Third-Party Charges.
Page 51
ASS MTOR We BREUMEAE fo PEP? Pores FARE 1 SF 18
vii. The remedies in { 32 are inapplicable to Consumer complaints involving dissatisfaction with purchases where the Consumer does not dispute that Consumer authorized the purchase.
33. Newly Acquired Entities: In the event that Sprint acquires any new entity, Sprint will take immediate steps to cease charging for all Commercial PSMS. With respect to Newly Acquired Entities, Sprint will provide the Consumer with access to a customer service representative who will have access to the Consumer’s account information related to Third-Party Charges for at least the prior 12 months. If such information is not available, Sprint will have 12 months to come into compliance with {| 32 with respect to such entities and, while coming into compliance, respond to the Consumer’s inquiry within 10 days using available information. As to all other requirements contained in this Order, Sprint will have a reasonable period of time, which in no event will exceed 6 months, in which to bring the Newly Acquired Entity into compliance with this Order. During that period, Sprint will take reasonable steps to obtain Express Informed Consent before a Consumer is charged for any Third-Party Charge.
34. Training: Sprint will, for at least 6 years from the Effective Date, conduct a training program with its customer-service representatives, at least annually, to administer the requirements of this Order. To the extent that Sprint no longer permits Third-Party Charges on Consumers’ Mobile Telephone Bill or the deduction of Third-
Party Charges on Consumers’ Prepaid Accounts, Sprint will conduct one training
Page 52
CARMA RSSEWHB BSSHMS Ceo FHRSUAHS Bage 16 af 18
program within 3 months of such cessation and will have no further obligation to conduct training programs under this Paragraph.
TI. Redress
35. Within 30 days of the Effective Date, Sprint will reserve $50,000,000 (“Redress Amount”) for the purpose of providing redress to Consumers. The Redress Amount must be identified as a liability in Sprint’s budget.
36. Sprint submitted a comprehensive written plan for providing redress consistent with this Order (“Redress Plan”) to the Enforcement Director. The Enforcement Director has not objected to this plan. Under the terms of the Redress Plan, Sprint will provide up to $50,000,000 for the purpose of providing redress to Consumers. Sprint will provide notice of Consumers’ right to file claims and receive redress, under the supervision of the Bureau, according to the terms set forth in the Redress Plan.
37. Sprint must implement and adhere to the steps, recommendations, deadlines, and timeframes outlined in the Redress Plan as if they were incorporated into this Order. Sprint and the Bureau, in consultation with the Participating States and Federal Communications Commission, may revise the terms of the Redress Plan.
38. Under 31 U.S.C. § 7701, Sprint, unless it already has done so, must furnish to the Bureau its taxpayer identifying numbers, which may be used for purposes of collecting and reporting on any delinquent amount arising out of this Order.
39. Within 30 days of the entry of a final judgment, consent order, or
settlement in a Related Consumer Action, Sprint must notify the Enforcement Director
Page 53
Cassette Res3t-WHP BeSHMEnt res FEREAR AGN Page te of 28
of the final judgment, consent order, or settlement in writing. That notification must indicate the amount of redress, if any, that Sprint paid or is required to pay to consumers and describe the consumers or classes of consumers to whom that redress has been or will be paid. Sprint’s obligation to report Related Consumer Actions will expire 5 years from the Effective Date of this Order.
IV. Reporting Requirements
40. Sprint must notify the Bureau of any development that may affect its compliance obligations arising under this Order, including but not limited to a dissolution, assignment, sale, merger, or other action that would result in the emergence of a successor company; the creation or dissolution of a subsidiary, parent, or affiliate that engages in any acts or practices subject to this Order; the filing of any bankruptcy or insolvency proceeding by or against Sprint; or a change in Sprint’s name or address. Sprint must provide this notice at least 30 days before the development or as soon as practicable after the learning about the development, whichever is sooner.
41. Within 7 days of the Effective Date, Sprint must designate at least one telephone number and email, physical, and postal address as points of contact, which the Bureau may use to communicate with Sprint.
V. Order Distribution and Acknowledgment
42. Within 30 days of the Effective Date, Sprint must deliver a copy of this Order to each of Sprint’s board members and executive officers.
43. For 5 years from the Effective Date, Sprint must deliver a copy of this
Order to any business entity resulting from any change in structure described in § IV
Page 54
[Illegible in the scan: 1 paragraph of unreadable text omitted. See the PDF for the original.]
and any future board member or executive officer with responsibilities related to Third- Party Charges before the board member or executive officer assume his or her responsibilities.
44. Sprint must secure a signed and dated statement acknowledging receipt of a copy of this Order, ensuring that any electronic signatures comply with the requirements of the E-Sign Act, 15 U.S.C. § 7001 et seq., within 30 days of delivery, from all persons receiving a copy of this Order under this Section. VI. Recordkeeping
45. Sprint must create and maintain for at least 5 years from the Effective Date all documents and records necessary to demonstrate full compliance with each provision of this Order, including all submissions to the Bureau. VII. Notices
46. Unless otherwise directed in writing by the Bureau, Sprint must provide all submissions, requests, communications, or other documents relating to this Order in writing, with the subject line, “Consumer Financial Protection Bureau v. Sprint Corporation, Case No. 14-cv-09931” and send them to:
Assistant Director for Enforcement
Consumer Financial Protection Bureau
ATTN: Office of Enforcement
1700 G Street, NW
Washington, DC 20552
Enforcement [email protected]
Page 55
Cast OSBST WHR BScHment feo PRP BEES PAE 4s of 18
VIII. Cooperation with the Bureau
47. Sprint must provide information related to the subject matter of this action in its possession or control within 30 days of receiving a written request from the Bureau. If Sprint determines such information is in the possession or control of a thirdparty, Sprint will promptly request such information from the third-party, and Sprint will work in good faith to collect and provide such information to the Bureau ona mutually-agreed-upon date.
IX. Compliance Monitoring
48. Within 30 days of receipt of a written request from the Bureau, Sprint must submit additional compliance reports or other requested information related to this Order, which must be made under penalty of perjury; provide sworn testimony; or produce documents.
49. Related to this Order, Sprint must permit Bureau representatives to interview any employee or other person affiliated with Respondent who has agreed to such an interview. The person interviewed may have counsel present.
50. Nothing in this Consent Order will limit the Bureau’s lawful use of civil investigative demands under 12 C.F.R. § 1080.6 or other compulsory process.
X. Release
51. The Bureau releases and discharges Sprint from all potential liability for law violations that the Bureau has or might have asserted based on the practices alleged in the Complaint, to the extent such practices occurred before the Effective Date and the
Bureau knows about them as of the Effective Date. The Bureau may use the practices
Page 56
Case 1:14-cv-09931-WHP Document 25 Filed OB/3 0/15 Page 18 of 18 Case 1:14-cv-09931-WHP Document 15-2 File % 19 oF 1
alleged in the Complaint in future enforcement actions against Sprint or its affiliates to establish a pattern or practice of violations or the continuation of a pattern or practice of violations or to calculate the amount of any penalty. This release does not preclude or affect any right of the Bureau to determine and ensure compliance with this Order, or to seek penalties for any violations of this Order. XI. Retention of Jurisdiction
52. The Court will retain jurisdiction of this matter for purposes of construction, modification, and enforcement of this Order. IT IS SO ORDERED.
Dated this 3 © day of Syme , 2015
% ; | = William H. Pauley III a United States District Court Judge