T-Mobile placed hundreds of millions of dollars of bogus charges on mobile phone bills that were never authorized by customers, according to a complaint filed by the Federal Trade Commission. It estimated that between 35 and 40 percent of the company’s total charges were based on “cramming.”
Services such as horoscope information, celebrity gossip, and flirting tips cost unknowing consumers $9.99 per month, the agency said, and T-Mobile continued to make the charges even for services with refund rates of 40 percent – an obvious sign that consumers were not authorizing the charges. Internal company documents demonstrate that T-Mobile received “a high number of complaints” about cramming charges dating back to early 2012.
“T-Mobile disregarded telltale signs of fraud,” director of the FTC’s Bureau of Consumer Protection Jessica Rich said at a press conference about the case. “There were oodles of complaints.”
According to the FTC, T-Mobile also made it difficult for consumers to realize they were being charged by third parties by listing the items under headings such as “Premium Service” or “Use Charges” without showing that the charges were recurring or from a third party. The actual charges were itemized in a less-than-clear format, such as “8888906150BrnStorm23918.”
When consumers did attempt to challenge the charges, T-Mobile often failed to provide a full refund, refused refunds, or claimed the consumers had authorized the charges, the agency said. And prepaid customers had no way of knowing about the charges as the $9.99 deduction occurred without notification.
The complaint, filed in Washington federal court, seeks to permanently enjoin T-Mobile from engaging in mobile cramming and requests disgorgement and refunds for consumers.
To read the complaint in FTC v. T-Mobile, click here.
Why it matters: In a statement about the action, FTC Chairwoman Edith Ramirez said the agency’s goal “is to ensure that T-Mobile repays all its consumers for these crammed charges,” an amount estimated in the millions of dollars. Last December, the FTC reached a deal with multiple third-party companies accused of issuing the charges; the agency said T-Mobile billed its customers for the services of these defendants.