The disagreement between President Obama and Senator Warren over the Trans Pacific Partnership (TPP) trade agreement is soaking up a lot of energy in political circles right now. But we would be remiss if we ignored the fact that something big happened this week that both of them are probably celebrating. Here’s an announcement from the Consumer Financial Protection Bureau:
Today we’re announcing settlements with Sprint and Verizon, who illegally billed consumers over a hundred million dollars in unauthorized third-party charges. If approved, these settlements will return $120 million directly to affected consumers.
Sprint’s and Verizon’s customers became victims by clicking on ads for “free” digital content such as ring tones or daily horoscopes, and were then charged without their consent. Many people did not know that third parties could add charges to their wireless bills. The illegal billing often continued undetected for months.
Sprint’s and Verizon’s billing systems invited illegal third-party charges and the companies did little or nothing to root them out. Sprint and Verizon also failed to properly track and respond to consumer complaints about these charges, while collecting hundreds of millions of dollars in revenue by serving as payment processors for these third-party companies. Sprint and Verizon received a 30-40 percent cut of every third-party charge.
Under the Dodd-Frank Act, we can hold companies, including payment processors and lenders, accountable when they engage in unfair, deceptive, or abusive practices.
This is exactly what the Consumer Financial Protection Bureau was designed to do and the $120 million can be added to the $4.6 billion it has already returned to customers as a result of enforcement actions.
Elizabeth Warren came up with the idea for a Consumer Financial Protection Bureau before she was elected to be the Senator from Massachusetts. President Barack Obama fought to have it included in the Dodd-Frank Act and appointed Richard Corday to run it. An announcement like this is something they can all take credit for.