"As the use of mobile payments grows, we will continue to hold wireless carriers accountable for illegal third-party billing," said CFPB director Richard Cordray.
The case, the first of its kind for the CFPB, focuses on a practice known as "cramming," or when a carrier allows a third-party company to slip new fees onto consumers' bills for services the customer never signed up for. The tactic can be lucrative for wireless carriers because the cellular provider typically takes a share of the charges. For every bogus payment charged to Sprint customers between 2004 and 2013, according to the suit, Sprint took a 40 percent cut.
"We are always vigilant for unlawful conduct in every area," said Jeff Ehrlich, a CFBP enforcement official, "including payment processors using mobile payment platforms."
The federal government has cracked down on cramming this year. In October, AT&T agreed to pay $105 million to settle cramming charges. And officials have announced they were investigating T-Mobile for similar behavior. On Monday, the National Journal reported that the Federal Communications Commission was considering its own sanctions against Sprint over mobile cramming.
The latest move by the CFPB suggests wireless carriers are coming under increasing scrutiny. The CFPB told reporters Wednesday that it was coordinating with the FCC and the Federal Trade Commission on the issue, but all three agencies have played a role in punishing cramming.
"We believe that many cops on the beat against this serious problem is a good thing," said Jessica Rich, director of the FTC's consumer protection bureau.
Typically, only 1 in 20 people ever realize they've been hit by mobile cramming, according to federal statistics. Victims are typically overcharged about $10 a month — a small enough fee that few will notice. And the charges are often masked by obscure line-item descriptions that could be easily mistaken for service fees from the wireless carrier itself.
A spokesman for Sprint did not immediately return a request for comment.