Attorney General's News Release

December 6, 2002

Nixon seeks TRO, injunction against Nextel, Sprint to stop them from using deceptive language on cell phone bills

St. Louis, Mo. — Attorney General Jay Nixon on Thursday (Dec. 5) filed a lawsuit to stop telecommunications companies Nextel and Sprint from listing charges on consumers' cell phone bill in what Nixon said was a misleading and deceptive manner. Nixon is asking the St. Louis City Circuit Court to issue a temporary restraining order and preliminary and permanent injunctions against the companies. A hearing on the temporary restraining order is scheduled for today at 2 p.m. in Division 3.

Nixon said Nextel and Sprint have raised their rates in the past year — which is permitted — but have itemized the rate increase on consumers' bills in such a way to make the increase appear to be a tax or other government-mandated fee. The lawsuit states that Nextel is listing the charges under the heading "Unit Taxes, Fees and Assessments" as a line item labeled "Federal Programs Cost Recovery," while Sprint terms the charges "USA Regulatory Obligations and Fees" under the heading "Other Surcharges and Fees."

"Consumers are being led to believe that these charges are part of a tax or other government fee, when they are actually part of the companies' overhead cost of complying with governmental regulations," Nixon said. "Nextel and Sprint are understating their monthly rates by deceptively listing this amount on the bills. Other cell phone companies are incorporating the rate increase as part of the basic charge, and these two companies need to do that as well."

The amount Nextel charged for the "Federal Programs Cost Recovery" was 55 cents per month from January through September 2002; Nextel increased the charge to $1.55 in October. The amount Sprint charged under "USA Regulatory Obligations and Fees" was not disclosed to consumers, but appears to be a percentage of the bill, Nixon said.

Nixon is asking the court to prohibit Nextel and Sprint from failing to fully and fairly disclose the nature of the "Federal Programs Cost Recovery" fee and "USA Regulatory Obligations and Fees" charges if the companies impose such fees. He also wants the defendants to fully disclose to their customers under contract that the imposition of the charges gives customers the right to terminate their contracts with Nextel or Sprint. Nixon also wants the defendants to pay appropriate civil penalties, as well as the costs to investigate and prosecute the matter.

Inquiries from consumers should be directed to consumer@ago.mo.gov or 1-800-392-8222 (from within Missouri) or 573-751-3321 (outside Missouri).

All media inquiries should be directed to Press Secretary John Fougere.

E-mail      Phone: 573-751-8844         Fax: 573-751-5818