Sprint Agrees to Pay FTC $2.95M Penalty to Settle FCRA Allegations

On October 21, 2015, the Federal Trade Commission announced an agreement with Sprint to resolve allegations that Sprint violated disclosure requirements of the Fair Credit Reporting Act (FCRA). Sprint will pay $2.95 million in civil penalties.

In a complaint filed in Kansas federal court, the FTC alleged that Sprint enrolled certain customers in the Account Spending Limit program and charged an extra monthly fee, based on information in customers' credit reports. The FTC alleged that Sprint used this risk-based pricing model without proper disclosures related to the pricing or the use of customers' consumer reports. Specifically, the Fair Credit Reporting Act, which includes the Risk-Based Pricing Rule, requires that companies notify customers when they are offered service on less favorable terms as a result of information from customers' consumer reports, including credit scores.

Under the terms of the FTC settlement, Sprint must pay $2.95 million in civil penalties, follow the FCRA and Risk-Based Pricing Rule going forward, and correct past violations by sending the required notices to customers who were not properly notified.

This settlement, including the amount of civil penalties and the FTC's ongoing supervision of Sprint, serves as a reminder to companies using consumers' data and making decisions based on that data that they must comply with applicable disclosure requirements, including under the FCRA.