updated 9/10/2004 2:14:41 PM ET 2004-09-10T18:14:41

Sprint and AT&T will pay nearly $1.5 million in civil penalties to settle government claims that the companies violated federal credit laws for customers seeking telephone service, the Federal Trade Commission announced Friday.

Under the agreement, Sprint will pay $1.1 million and AT&T will pay $365,000.

The commission said the two companies either denied service to prospective customers or placed conditions on their service because of their credit reports.

In many cases, the companies were then required to notify the consumers of their rights under the Fair Credit Reporting Act to obtain a free copy of their credit report or of their right to dispute with the credit bureau information in their reports. The FTC says those notifications either were not sent to consumers or were sent but were incomplete.

In the case of Sprint, about 550,000 consumers were affected.

The AT&T case involved roughly 175,000 consumers.

"We don't find this to be a widespread problem in the industry," Ronald Isaac, attorney with the FTC's Division of Financial Practices, said. But "we don't think consumers generally are aware that they're entitled to this notice" from the phone companies, he said.

AT&T said in a statement that the company does not admit wrongdoing or non-compliance with the law or FTC rules. "AT&T is committed to complying with all federal and state fair-credit laws and will continue to rigorously maintain and monitor its compliance with such laws," said company spokesman Robert Nersesian.

Sprint also denied any wrongdoing and said the company decided not to engage in a lengthy court battle so that it could focus instead on serving its customers.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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