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UNITED STATES DISTRICT COURT 

DISTRICT OF KANSAS 

KANSAS CITY-LEAVENWORTH DIVISION 

UNITED STATES OF AMERICA, 

Plaintiff, 

v. 

Sprint Corporation, a corporation, 

Defendant. 

Case No. 2:15-cv-9340 

COMPLAINT FOR CIVIL 

PENALTIES, PERMANENT 

INJUNCTION, AND OTHER 

EQUITABLE RELIEF

 Plaintiff, the United States of America, acting upon notification and authorization to the 

Attorney General by the Federal Trade Commission (“FTC” or “Commission”), pursuant to 

Section 16(a)(1) of the Federal Trade Commission Act (“FTC Act”), 15 U.S.C. § 56(a)(1), for its 

Complaint alleges: 

 1. Plaintiff brings this action under Sections 5(a), 5(m)(1)(A), 13(b), 16(a) of the FTC 

Act, 15 U.S.C. §§ 45(a), 45(m)(1)(A), 53(b), and 56(a), and Section 621(a) of the Fair Credit 

Reporting Act (“FCRA”), 15 U.S.C. § 1681s(a), to obtain monetary civil penalties, a permanent 

injunction, and other equitable relief for Defendants’ acts or practices in violation of Section 5 of 

the FTC Act, 15 U.S.C. § 45; Section 615 of the FCRA, 15 U.S.C. § 1681m; and the rule regarding 

Duties of Users Regarding Risk-Based Pricing (“Risk-Based Pricing Rule”), 12 C.F.R. § 1022.70 

et seq. 

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JURISDICTION AND VENUE

 2. This Court has subject matter jurisdiction pursuant to 28 U.S.C. §§ 1331, 1337(a), 

1345, and 1355, and 15 U.S.C. §§ 45(a)(1), 45(m)(1)(A), 53(b), 56(a), 1681s(a), and 1692l. 

 3. Venue is proper in this district under 28 U.S.C. § 1391(b)(1), (b)(2), and (c)(2), and 

15 U.S.C. § 53(b). 

PLAINTIFF

 4. This action is brought by the United States of America on behalf of the FTC. The 

Commission is an independent agency of the United States Government created by statute. 15 

U.S.C. §§ 41-58. The FTC enforces Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), which 

prohibits unfair or deceptive acts or practices in or affecting commerce, and the FCRA, 15 U.S.C. 

§ 1681 et seq., which imposes duties on consumer reporting agencies and those who furnish 

information to a consumer reporting agency or use information obtained from a consumer 

reporting agency. 

DEFENDANT 

 5. Defendant Sprint Corporation (“Sprint”) is a Delaware corporation with its 

principal place of business at 6200 Sprint Parkway, Overland Park, Kansas. Sprint transacts or 

has transacted business in this district and throughout the United States. 

 6. At all times material to this Complaint, acting alone or in concert with others, 

Sprint has advertised, marketed, distributed, or sold mobile phone and data plans to consumers 

throughout the United States. Under these plans, consumers can incur charges for voice, data, 

text, and third-party services, and then pay those charges on a later date. 

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COMMERCE

 7. At all times material to this Complaint, Defendant has maintained a substantial 

course of trade in or affecting commerce, as “commerce” is defined in Section 4 of the FTC Act,

15 U.S.C. § 44. 

THE FAIR CREDIT REPORTING ACT 

 8. The FCRA was enacted in 1970, became effective on April 25, 1971, and has been 

in force since that date. The Fair and Accurate Credit Transactions Act (“FACT Act”) amended 

the FCRA in December 2003, Public Law No. 108-159, 117 Stat. 1952, and the Dodd Frank Wall 

Street Reform and Consumer Protection Act (“Dodd-Frank Act”) amended the FCRA in July 

2010, Pub. L. No. 111-203, 124 Stat. 1376. 

 9. Section 621 of the FCRA, 15 U.S.C. § 1681s, authorizes the Commission to use all 

of its functions and powers under the FTC Act to enforce compliance with the FCRA by all 

persons subject thereto except to the extent that enforcement specifically is committed to some 

other governmental agency, irrespective of whether the person is engaged in commerce or meets 

any other jurisdictional tests set forth by the FTC Act. 

THE RISK-BASED PRICING RULE 

 10. Section 311 of the FACT Act added Section 615(h), 15 U.S.C. § 1681m(h), to the 

FCRA to direct the Commission and the Federal Reserve Board to prescribe a rule requiring 

companies to provide consumers with notice when they engage in the practice of Risk-Based 

Pricing. Risk-Based Pricing occurs when companies provide consumers less favorable credit 

terms based on a review of their credit reports. Congress added Section 615(h) to the FCRA to 

ensure that consumers offered less favorable credit terms will receive notice of, among other 

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things, any credit score used by the company and the key factors that adversely affected that score. 

15 U.S.C. § 1681m(h)(5)(E). Consumers need disclosure of the key factors adversely affecting 

their credit scores to determine whether those scores are based on errors in their consumer reports 

and whether they should contact consumer reporting agencies to correct those errors. 

 11. The Dodd-Frank Act transferred rulemaking authority for most provisions of the 

FCRA to the Consumer Financial Protection Bureau; the FTC remains vested with enforcement 

authority. See Sections 1061 and 1088 of the Dodd-Frank Act. Pursuant to the Dodd-Frank Act 

and the FCRA, as amended, the Consumer Financial Protection Bureau republished the 

Risk-Based Pricing Rule at 12 C.F.R. § 1022.70 et seq., effective December 30, 2011. 

 12. The FCRA defines a “consumer report” as “any written, oral, or other 

communication of any information by a consumer reporting agency bearing on a consumer’s credit 

worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, 

or mode of living which is used or expected to be used or collected in whole or in part for the 

purpose of serving as a factor in establishing the consumer’s eligibility for (A) credit or insurance 

to be used primarily for personal, family, or household purposes . . . .” 15 U.S.C. § 1681a(d)(l).

 13. The Risk-Based Pricing Rule applies to any person who uses a consumer report in 

connection with an application for or grant of credit, and who grants to a consumer, based in whole 

or in part on the consumer report, credit on terms that are materially less favorable than those 

available to a substantial proportion of consumers. 12 C.F.R. § 1022.72. 

 14. The Risk-Based Pricing Rule defines “credit” as “the right granted by a creditor to a 

debtor to defer payment of debt or to incur debts and defer its payment or to purchase property or 

services and defer payment therefor.” 12 C.F.R. § 1022.71(h). 

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 15. The Risk-Based Pricing Rule, defines “material terms” to include, “[i]n the case of 

credit for which there is no annual percentage rate, the financial term that varies based on 

information in a consumer report and that has the most significant financial impact on consumers, 

such as a deposit required in connection with credit extended by a telephone company or utility . . 

. .” 12 C.F.R. § 1022.71(n)(3). 

 16. A person subject to the Risk-Based Pricing Rule must provide a Risk-Based Pricing 

Notice containing the following specified information to consumers receiving the materially less 

favorable terms: 

 A. A statement that a consumer report includes information about the 

consumer’s credit history and the type of information included in that 

history; 

 B. A statement that the terms offered have been set based on information from 

a consumer report; 

 C. A statement that the terms offered may be less favorable than the terms 

offered to consumers with better credit histories; 

 D. A statement that the consumer is encouraged to verify the accuracy of the 

information contained in the consumer report and has the right to dispute 

any inaccurate information in the report; 

 E. The identity of each consumer reporting agency that furnished a consumer 

report used in the credit decision; 

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 F. A statement that Federal law gives the consumer the right to obtain a copy 

of a consumer report from the consumer reporting agency or agencies 

identified in the notice without charge for 60 days after receipt of the notice; 

 G. A statement informing the consumer how to obtain a consumer report from 

the consumer reporting agency or agencies identified in the notice and 

providing contact information (including a toll-free telephone number, 

where applicable) specified by the consumer reporting agency or agencies; 

 H. A statement directing consumers to the Web site of the Consumer Financial 

Protection Bureau to obtain more information about consumer reports; and 

 I. If the creditor used a credit score, 

 i) A statement that a credit score is a number that takes into account 

information in a consumer report, that the consumer’s credit score 

was used to set the terms of credit offered, and that a credit score can 

change over time to reflect changes in the consumer’s credit history; 

 ii) The credit score used in making its credit decision; 

 iii) The range of possible credit scores under the model used to generate 

the credit score; 

 iv) All of the key factors that adversely affected the credit score, limited 

to four key factors unless one of the key factors was the number of 

enquiries to the consumer’s report and in such instance listing five 

key factors; 

 v) The date on which the credit score was created; and 

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 vi) The name of the consumer reporting agency or other person that 

provided the credit score. 

See 12 C.F.R. § 1022.73(a). 

 17. The Risk-Based Pricing Rule provides that a business providing closed-end credit 

must provide consumers with a Risk-Based Pricing Notice before “consummation of the 

transaction.” 12 C.F.R. § 1022.73(c)(1)(i). 

 18. The Risk-Based Pricing Rule defines “consummation” as “the time that a consumer 

becomes contractually obligated on a credit transaction.” 12 C.F.R. §§ 1022.71(e); 

1026.2(a)(13). 

DEFENDANT’S BUSINESS ACTIVITIES 

 19. Sprint provides mobile phone and data plans. Under these plans, consumers can 

incur charges for voice, data, text, and third-party services, and Sprint bills them for those charges 

at a later date. By offering consumers the ability to incur charges and pay for them at a later date, 

Sprint extends closed-end credit and is therefore subject to the Risk-Based Pricing Rule. 

 20. For certain consumers, Sprint provides services and extends credit only if the 

consumers pay an additional fee of up to $7.99 a month as part of an Account Spending Limit 

Program (“ASL Program”). Many consumers who have been enrolled in the ASL Program did 

not know that they are enrolled or paying additional fees until it was too late to cancel Sprint 

service without incurring fees. For a substantial proportion of other consumers, Sprint provides 

services without enrolling them in the program or imposing additional fees. 

 21. To determine whether a consumer should be subject to an ASL Program, Sprint 

relies on information in consumer reports and credit scores. 

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 22. Sprint provides notification to consumers enrolled in the ASL Program, but that 

notification has not contained the key factors in those reports that adversely impact consumers’ 

credit scores. Because Sprint has omitted those factors, the notification has failed to provide 

consumers with information necessary for them to determine whether their credit scores are based 

on errors in their consumer reports. The notification also does not contain an explanation of the 

information contained in consumer reports, and language encouraging consumers to verify the 

accuracy of the information contained in consumer reports and advising that consumers can access 

the Consumer Financial Protection Bureau’s website to obtain more information about consumer 

reports. In some instances, Sprint provides the notification after a consumer has become 

contractually obligated and is subject to additional fees. 

VIOLATIONS OF THE RISK-BASED PRICING RULE

Count I 

 23. Sprint has provided credit to consumers on material terms that are materially less 

favorable terms than those offered to a substantial proportion of other consumers, based on 

information in consumer reports. 

 24. In numerous instances, Sprint has failed to provide a notice with all the information 

required by the Risk-Based Pricing Rule before consummation of the transaction. 

 25. Sprint’s acts or practices, as described in Paragraphs 23-24 violate the Risk-Based 

Pricing Rule. Pursuant to Section 621(a)(1) of the FCRA, 15 U.S.C. § 1681s(a)(l), Sprint’s 

violations of the Risk-Based Pricing Rule constitute unfair or deceptive acts or practices in 

violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a). Section 621 of the FCRA, 15 U.S.C. 

§ 1681s, authorizes the Commission to use all of its functions and powers under the FTC Act to 

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enforce compliance with the requirements imposed by the FCRA on all persons subject thereto 

except to the extent that enforcement specifically is committed to some other governmental 

agency, irrespective of whether the person is engaged in commerce or meets any other 

jurisdictional tests set forth by the FTC Act. 

THIS COURT’S POWER TO GRANT RELIEF

 26. Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), empowers this Court to grant 

injunctive and such other relief as the Court may deem appropriate to halt and redress violations 

of any provision of law enforced by the FTC. 

CIVIL PENALTIES FOR VIOLATIONS OF THE RISK-BASED PRICING RULE 

 27. Section 621(a)(2)(A) of the FCRA, 15 U.S.C. § 168ls(a)(2)(A), as adjusted by 16 

C.F.R. § 1.98(m), authorizes the Court to award monetary civil penalties of not more than $3,500 

for each knowing violation of the FCRA that constitutes a pattern or practice of violations of the 

statute. 

 28. Each instance in which Sprint has failed to comply with Section 615(h)(l) of the 

FCRA, 15 U.S.C. § 1681m(h)(1), and the Risk-Based Pricing Rule, 12 C.F.R. § 1022.70 et seq., 

constitutes a separate violation of the FCRA for the purpose of assessing monetary civil penalties 

under Section 621(a)(2)(A) of the FCRA, 15 U.S.C. § 1681s(a)(2)(A). 

PRAYER FOR RELIEF

 WHEREFORE, Plaintiff, pursuant to 15 U.S.C. §§ 45(m)(l)(A), 53(b), 1692l, 1681s(a), 

and the Court’s own equitable powers, respectfully requests that the Court:

 1. Enter judgment against Sprint and in favor of Plaintiff for each violation alleged in 

this Complaint; 

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 2. Enter a permanent injunction to prevent future violations of the FCRA and the 

Risk-Based Pricing Rule by Sprint; 

 3. Award such relief as the Court finds necessary to redress injury to consumers 

resulting from Sprint’s violations of the FCRA, including but not limited to, rescission or 

reformation of contracts, restitution, the refund of monies paid, and the disgorgement of ill-gotten 

gains; 

 4. Award Plaintiff monetary civil penalties from Sprint for each violation of the 

FCRA and the Risk-Based Pricing Rule alleged in this Complaint; and 

 5. Award Plaintiff the costs of bringing this action, as well as such other and 

additional relief as the Court may determine to be just and proper. 

 Respectfully submitted, 

FOR THE UNITED STATES OF AMERICA 

BARRY R. GRISSOM 

United States Attorney 

CHRISTOPHER ALLMAN 

Assistant United States Attorney 

District of Kansas 

500 State Avenue, Suite 360 

Kansas City, KS 66101 

Telephone: (913) 551-6684 

Facsimile: (913) 551-6541 

Email: Chris.Allman@usdoj.gov 

BENJAMIN C. MIZER 

Principal Deputy Assistant Attorney General 

Civil Division 

JONATHAN F. OLIN 

Deputy Assistant Attorney General 

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MICHAEL S. BLUME 

Director 

Consumer Protection Branch 

ANDREW E. CLARK 

Assistant Director 

/s/ Kerala T. Cowart 

KERALA T. COWART 

California Bar No. 284519 

Trial Attorney 

Consumer Protection Branch 

U.S. Department of Justice 

P.O. Box 386 

Washington, DC 20044 

Telephone: (202) 353-3881 

Facsimile: (202) 514-8742 

Email: Kerala.T.Cowart@usdoj.gov 

 

FOR THE FEDERAL TRADE COMMISSION 

Matthew James Wilshire, Attorney 

Duane Pozza, Attorney 

Federal Trade Commission 

600 Pennsylvania Ave., N.W., Mailstop CC10232 

Washington, DC 20580 

202-326-2976 

202-326-3768 

mwilshire@ftc.gov 

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