Federal judge demands details on Sprint $50 million 'cramming' settlement

By Joseph Ax

NEW YORK (Reuters) - A federal judge said on Tuesday he would not approve a proposed $50 million settlement between the Consumer Financial Protection Bureau and Sprint Corp over claims the mobile carrier added unauthorized charges to phone bills unless the two sides provide additional details about its fairness.

In an order filed in New York federal court, U.S. District Judge William Pauley said papers filed jointly by Sprint and the CFPB were bereft of information that would allow him to determine whether the deal deserves his approval.

The proposed agreement is part of a broader deal in which Sprint and Verizon Communications Inc agreed to pay $68 million and $90 million, respectively, to end several U.S. government probes into the practice known as "cramming," in which mobile carriers charge customers for services they never requested such as horoscopes.

"How the Bureau believes a judge can evaluate the proposed settlement with a one sentence joint motion, no memorandum of law, and no declarations, eludes this Court," Pauley wrote. "It is especially ironic, given the Bureau's core mission as described on its website to 'give consumers the information they need to understand the terms of their agreements.'"

Pauley did not say the proposed settlement appears unfair or unreasonable. His concerns, however, mirror those of a handful of other federal judges, most notably Jed Rakoff in New York, who have complained that parties seeking court approval for settlements have sometimes treated it as little more than a rubber stamp.

In a statement, a Sprint spokeswoman said: "We are reviewing Judge Pauley's order and we will go through the necessary steps to address this matter with the court."

A spokeswoman for the CFPB declined to comment, but said the agency would file a response to the order.

Last year, AT&T Inc paid $105 million and T-Mobile US $90 million to settle similar probes.

The case is Consumer Financial Protection Bureau v. Sprint Corporation, U.S. District Court for the Southern District of New York, No. 14-cv-09931.