Sprint learns that a 'rebate' includes paying people money

Telco settles allegations it pocketed cash promised to customers

US wireless carrier Sprint will pay $2.3m to settle allegations it withheld rebates from customers.

The state of Illinois will collect and distribute the money to 32,000 residents who signed up for Sprint's mobile services between 2003 and 2011, when the carrier was offering rebates to new customers.

State Treasurer Michael Frerichs had previously filed suit alleging that Sprint and its partner company, Young America Corp, had earmarked the $2.3m for rebates to the customers in the state but, rather than pay out the money or mark it as unclaimed property, they pocketed the cash when the customers failed to complete the process to collect on their rebates.

Under Illinois state law, rebates not collected are to be considered unclaimed property and, rather than go back into the company's coffers, they should have been handed over for the state to distribute.

By signing the settlement deal, Frerichs said, Sprint will do just that, in a roundabout way. The state will pay out the settlement money to customers who were eligible for a rebate but never collected. Sprint has also agreed to provide the names of all 32,000 customers due to receive the payouts.

"Rebates are used to encourage individuals to purchase a product or service," Frerichs said.

"Too many times, however, that hook becomes a dizzying maze that seems to shield a payment rather than fulfill a promise."

As part of the settlement agreement, Sprint will not need to acknowledge any wrongdoing in the matter. The telco made a point of noting this in its comments on the deal.

"We are happy to resolve this issue," said Sprint vice president Dave Tovar.

"We value our customers and have continued to invest in network enhancements in Chicago, Chicagoland, Springfield, and throughout the state over the last year in order to provide them and those switching to Sprint with an excellent network experience."

The Treasurer's office has set up a website for current and former Sprint customers to check if they are eligible to receive a rebate payout.

The state did not provide figures on how much money each customer would receive, though the settlement figure averages out to roughly $84 per person. ®