Sprint has agreed to pay the Federal Trade Commission $2.95 million in fines for failing to notify customers about additional fees if they had low credit scores.
According to the FTC, Sprint customers with low credit scores were ordered to pay an additional $7.99 monthly fee after they were placed in an Account Spending Limit(ASL) program. The problem was Sprint never notified customers why they were placed in the program.
Under the Risk-Based Pricing Rule of the Fair Credit Reporting Act, companies must inform consumers when they are offered service on less favorable terms because of information based on credit reports or scores.
FTC’s complaint said the mobile carrier failed to provide consumers placed in the ASL program with all of the disclosures in the required notice, omitting required information that would help consumers understand the information in their credit reports, and that may have alerted them to possible errors that caused them to receive less favorable terms of credit.
The FTC said Sprint only told customers after they could no longer switch carriers and cancel their service without an early cancellation fee.
“Sprint failed to give many consumers required information about why they were placed in a more costly program, and when they did, the notice often came too late for consumers to choose another mobile carrier,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection.
“Companies must follow the law when it comes to the way they use consumer credit reports and scores.”
Sprint is now required to provide required notices to consumers within five days of signing up for Sprint or by a date that gives them the chance to avoid recurring charges like those in the ASL program. Additionally, Sprint must send corrected risk-based pricing notices to customers who received incomplete notices from the company.