FTC Accuses T-Mobile of Making Hundreds of Millions Off Bogus Charges

Photo (cc) by JeepersMedia

T-Mobile bilked its customers out of hundreds of millions of dollars in unauthorized charges, the Federal Trade Commission says.

The FTC filed a suit in U.S. District Court against the wireless provider, accusing T-Mobile of pocketing 35 to 40 percent of unauthorized subscription charges, which usually totaled $9.99 per month. The subscriptions for third-party services like ringtones, horoscopes, flirting tips and celebrity gossip were delivered to customers via text message.

The practice of adding bogus charges to a bill without notifying the customer is known as cramming. According to the Los Angeles Times:

T-Mobile did not obtain permission from customers for the charges, which were “nearly impossible” to notice because they were buried in lengthy bills, the FTC said. The improper charges date to at least 2009 and the company should have known the charges were unauthorized because of high requests from consumers for refunds.

The refund rate on some of the services was upward of 40 percent in a single month, which should have been a red flag for T-Mobile, the FTC said.

“It’s wrong for a company like T-Mobile to profit from scams against its customers when there were clear warning signs the charges it was imposing were fraudulent,” said FTC chairwoman Edith Ramirez. “The FTC’s goal is to ensure that T-Mobile repays all its customers for these crammed charges.”

T-Mobile chief executive John Legere said the FTC’s “sensationalized” complaint was “unfounded and without merit,” the LAT reported.

In a statement, he said the company said it stopped billing for premium text message services last year and “launched a proactive program to provide full refunds for any customer that feels that they were charged for something they did not want.”
“T-Mobile is fighting harder than any of the carriers to change the way the wireless industry operates and we are disappointed that the FTC has chosen to file this action against the most pro-consumer company in the industry rather than the real bad actors,” Legere said.

The Consumers Union applauded the FTC’s move. Delara Derakhshani, policy counsel for Consumers Union, said:

Millions of consumers fall victim to cramming shakedowns each year. Cramming schemes can strike no matter what technology you’re using. Actions like the FTC’s announcement today should put scammers on notice that taking advantage of consumers is a serious offense that will not be tolerated.

Meanwhile, the Federal Communications Commission has also announced it’s investigating T-Mobile for cramming.

Are you a T-Mobile customer? Have you had any issues with unauthorized charges on your bill? Share your thoughts below or on our Facebook page.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

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