Banking and Finance Law Daily CFPB and DOJ to submit positions on modifications of Sprint consent order
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Tuesday, April 11, 2017

CFPB and DOJ to submit positions on modifications of Sprint consent order

By John M. Pachkowski, J.D.

Noting that "the siren song of $15.14 million in unexpended funds lured some new sailors into the shoals of this litigation," a federal trial judge has ordered the Consumer Financial Protection Bureau and Justice Department to supply their respective positions regarding a proposed modification of a 2015 Consent Order between the CFPB and Sprint Corporation.

The 2015 Consent Order was intended to settle a lawsuit brought by the bureau against Sprint, in U.S. District Court for the Southern District of New York, alleging that Sprint knowingly allowed unauthorized third-party charges to be billed to its wireless telephone customers between 2004 and 2013 (see Banking and Finance Law Daily, Dec. 17, 2014).

The court’s latest Memorandum and Order was the result of a Jan. 3, 2017, "Memorandum in Support of Joint Motion to Intervene to Modify Stipulated Final Judgment and Order" filed by the Attorneys General for the states of Connecticut, Indiana, Kansas, and Vermont. The state AGs sought to intervene in the case to ensure that the approximately $14 million of Sprint’s remaining, unused "consumer redress funds" are used for "consumer protection purposes" (see Banking and Finance Law Daily, Jan. 6, 2017).

It should be noted that during 2015, Sprint entered into separate multi-million dollar settlements, totaling $18 million, with the Federal Communications Commission and with all 50 states and the District of Columbia to resolve charges stemming from its third-party billing practices.

The court ordered the CFPB and Justice Department to provide their positions on the proposed modification of the consent order since that modification would "alter the Consent Order in a fundamental way by redirecting elsewhere $15.14 million earmarked for the U.S. Treasury." The court added that the proposed modification "may raise an issue implicating the Miscellaneous Receipts Act, which provides that Government officials ‘receiving money for the Government from any source shall deposit that money with the Treasury.’"

To comply with the court’s order, the CFPB and Justice Department must file their respective memoranda by May 10, 2017. The state AGs and Sprint may file responsive memoranda by May 24, 2017. As part of its memorandum, the CFPB is also requested to "advise this Court where the unexpended funds have been deposited during the pendency of the intervenors’ application."

Companies: Sprint Corporation

MainStory: TopStory CFPB ConnecticutNews EnforcementActions IndianaNews KansasNews NewYorkNews UDAAP VermontNews

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