US Networks Agree to Revamp Cell Phone Advertising

Missouri's Attorney General Jay Nixon has announced that he has reached agreements with Nextel and Sprint requiring them to use clearer and more explanatory language in their advertising for cell phone plans and in billing statements sent to cell phone consumers in Missouri. The two companies also will pay US$50,000 each to the Missouri Merchandising Practices Revolving Fund as part of the agreements.

"This is a significant victory for cell phone consumers, because price comparison is paramount to many consumers when they shop for cell phone plans," Nixon said. "Other cell phone companies have included these types of charges in their basic rate, without tacking them on as separate items and possibly misleading customers. These agreements with Nextel and Sprint will help clarify the bottom line for consumers when comparing plans."

Nixon filed a lawsuit against Nextel and Sprint last December, alleging they listed charges on consumers' cell phone bills in a misleading and deceptive manner. The companies itemized rate increases on the bills in such a way to make the increase appear to be a tax or other government-mandated fee when that was not the case, the lawsuit charged.

Nextel listed the charges under the heading "Unit Taxes, Fees and Assessments" as a line item labeled "Federal Programs Cost Recovery," while Sprint termed the charges "USA Regulatory Obligations and Fees" under the heading "Other Surcharges and Fees." With the agreements announced today, the Attorney General will dismiss his lawsuit filed in St. Louis City Circuit Court.

While not admitting liability in the settlements, Nextel and Sprint agreed to clearly and conspicuously disclose that any amounts they billed to Missouri consumers to comply with federal mandates and initiatives - such as local number portability or E911 capabilities - were being imposed by the companies and not by the federal or state governments. The companies also will disclose in their advertising in Missouri that the fees are not a tax or government charge."

Posted to the site on 4th July 2003