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From Banking and Finance Law Daily, May 19, 2015

Judge tells CFPB to provide information backing up Sprint settlement

By Andrew A. Turner, J.D.

A federal district judge wants an explanation of how a proposed settlement of the Consumer Financial Protection Bureau’s action against Sprint Corporation is “fair, reasonable and consistent with the public interest” before giving his approval. Making clear that the duty to evaluate a proposed settlement goes beyond a “rubber stamp,” the judge said that the public importance of the case dictates a need for information to understand the settlement terms. (Consumer Financial Protection Bureau v. Sprint Corp., May 19, 2015, Pauley, W.).

The CFPB had charged that Cellular telephone service provider Sprint operated a billing system that it knew allowed third party billing aggregators to cram millions of dollars in illegal charges onto consumers’ bills between 2004 and 2013. On May 12, 2015, the CFPB announced that it was seeking judicial approval of a proposed consent order which called for Sprint to pay $50 million in customer refunds and make changes in business practices.

Pauley questioned “how the Bureau believes a judge can evaluate the proposed settlement with a one sentence motion, no memorandum of law, and no declarations.” The parties were directed to submit a motion to provide justification for the consent decree.

The case is No. 14cv9931.

Attorneys: Genessa Stout for the Consumer Financial Protection Bureau. Jeffrey James Chapman (McGuire Woods LLP) for Sprint Corp.

Companies: Sprint Corporation

MainStory: TopStory CFPB EnforcementActions NewYorkNews UDAAP

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