WASHINGTON — The Federal Trade Commission charged cell phone carrier and local institution T-Mobile USA of making hundreds of millions of dollars in bogus charges on customer’s cellphone bills under the guise of “premium” SMS subscriptions that were never authorized by customers.
The FTC alleges T-Moble charged consumers for unauthorized subscriptions to content such as “flirting tips, horoscope information or celebrity gossip,” that typically cost $10 per month; a practicey known as cramming.
T-mobile, which allegedly saw 30-40 percent of these proceeds, kept charging consumers years after the company learned the charges were fraudulent and not subscribed to by the user, even after thousands of users notified the company of the charges.
“It’s wrong for a company like T-Moblie to profit from scams against its customers when there were clear warning signs the charges it was imposing were fraudulent,” the FTC Chairwoman’s Edith Ramirez said.
Below is an example of a T-Mobile Bill, with the unauthorized charges underlined:
The FTC has alleged that because such a large number of people were seeking refunds, it was an obvious sign to T-Mobile that the charges were never authorized by its customers.
The FTC said the group is striving to make sure T-Mobile pay back it’s customers because of the “deceptive and unfair” practices.
T-Mobile responded to the FTC’s complaint, calling it “unfounded and without merit.”
We have seen the complaint filed today by the FTC and find it to be unfounded and without merit. In fact T-Mobile stopped billing for these Premium SMS 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.
As the Un-carrier, we believe that customers should only pay for what they want and what they sign up for. We exited this business late last year, and announced an aggressive program to take care of customers and we are disappointed that the FTC has instead chosen to file this sensationalized legal action. We are the first to take action for the consumer and I am calling for the entire industry to do the same.
This is about doing what is right for consumers and we put in place procedures to protect our customers from unauthorized charges. Unfortunately, not all of these third party providers acted responsibly—an issue the entire industry faced. We believe those providers should be held accountable, and the FTC’s lawsuit seeking to hold T-Mobile responsible for their acts is not only factually and legally unfounded, but also misdirected.
Recently, the FTC has made significant actions to end mobile cramming, the trade commission said.