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Sprint Forced to Face New York Lawsuit Over $300 Million

October 20, 2015 - Written By Fernando Bonilla

Sprint, the nation’s fourth-largest wireless carrier, will undergo a $300 million lawsuit in New York. Sprint has allegedly committed extensive fraud in the state and, despite previous attempts by the carrier to toss out the case, will be forced to pay up if found guilty.

In 2012, the New York attorney general filed a fraud lawsuit against Sprint that would see the company pay hundreds of millions of dollars. The allegations say Sprint was not taxing its plans in accordance to state-mandated levels, and when taxes were due, the carrier did not send in the appropriate sum. Sprint was allegedly looking for ways to make their service seem more appealing to potential clients than its competitor’s like Verizon Wireless or AT&T. State or local regulations were not followed, and consumers did benefit. It is estimated Sprint subscribers in New York saved $4.6 million a month in what was supposed to be government taxes. In the end, Sprint was not able to collect the minimum $100 million in taxes the state was expecting, and now the attorney general is asking for the carrier be penalized by three times that amount.

Sprint appealed the first lawsuit, leaving it at a standstill until a decision could be reached. The appeal was made on the basis that the 2002 New York state law which enacted tax collection on interstate wireless services was unconstitutional. Now, the state’s highest court, the Court of Appeals, reached a 4-1 verdict which ultimately rejects Sprint’s argument.

Without any other obstacles in his path, New York attorney general Eric Schneiderman can now prosecute Sprint in the hope the state’s tax dollars will be repaid. “There has to be one set of rules for everyone no matter how rich or how powerful, and that includes the biggest corporations paying their fair share of taxes,” said Schneiderman, pointing out that the case was not only to benefit the state but also to help lay ground rules for acceptable behavior. Of course, following the law is a fundamental point, but having companies accept less than the required payment from customers unfairly hands them an advantage over other more honest companies. The money Sprint was attempting to save its customers may end up costing the carrier much more.