[September 13, 2004]

Sprint and AT&T to Settle With FTC

BY JOHANNE TORRES

The Federal Trade Commission (FTC) slapped Sprint (news � alert - quote) with a $1.125 million charge, claiming that the telecom giant dodged federal credit laws. Sprint allegedly didn�t notify about 550,000 prospective consumers about viewing their credit reports without their knowledge when attempting to sign up for telephone services.

AT&T (news - alert - quote) is also being penalized for allegedly violating the same credit laws, the company, however, will be required to pay a lower fee of $365,000. AT&T�s stunt allegedly affected about 175,000 prospective consumers.

According to federal credit laws, telecoms are allowed to view credit reports when customers attempt to sign up for services, only if they are notified and given a chance to review the report themselves, and dispute any possible errors on it. This regulation applies to any company using customers� credit reports.  

In Sprint and AT&T�s case, the FTC claims that the companies did not inform prospective customers of their rights under Fair Credit Reporting Act as required by the federal credit laws. Under the act, customers are allowed to obtain a free copy of their credit report enabling then to place disputes with the credit bureau information in their reports. The FTC says Sprint and AT&T never sent the notification, or in many cases it was sent incomplete.

Sprint denied any wrongdoing and said the company decided to settle, not engaging in a lengthy court battle so that it could focus instead on serving its customers.

AT&T said in a statement that the company does not admit wrongdoing or non-compliance with the law or FTC rules. "AT&T is committed to complying with all federal and state fair-credit laws and will continue to rigorously maintain and monitor its compliance with such laws," said company spokesman Robert Nersesian.