The Federal Trade Commission (FTC) and the FCC escalated their war against “cramming” this week with the signing of a consent decree under which T-Mobile USA has agreed to pay upwards of $90 million in customer refunds and other penalties to settle charges that the company profited from the addition of millions of dollars in unauthorized third-party charges to wireless subscriber bills.
Friday’s consent decree mirrors a similar pact in which AT&T agreed last October to settle cramming allegations with a payment of $105 million, which constituted the largest enforcement action in the FCC’s history. The T-Mobile decree also follows the filing of a federal lawsuit last week by the Consumer Financial Protection Bureau, which accuses Sprint of illegally billing subscribers tens of millions of dollars in fraudulent third-party charges between 2004 and 2013.
Terminating a lawsuit filed by the FTC in July, the consent decree requires T-Mobile to pay at least $67.6 million into a customer redress program through which refunds would be paid to current and former subscribers affected by cramming since June 2010. T-Mobile is also required to pay $18 million in fines to the state governments and an additional $4.5 million to the U.S. Treasury. If customer refunds exceed the $67.5 million allocated to the redress fund, T-Mobile must satisfy all refund requests even if the total settlement amount surpasses $90 million. The agreement also bars T-Mobile from automatically billing customers for premium third-party SMS services and requires the carrier to obtain express customer consent before adding any third-party charges to their bills.
Pointing to the AT&T settlement, FCC Enforcement Bureau Chief Travis LeBlanc advised a press gathering that “we have now brought tangible relief from cramming to nearly 50% of all mobile subscribers in the United States.” LeBlanc also noted that the need for recent FTC and FCC action demonstrates that industry self-regulation is not working, as he confirmed the FCC’s plans next year “to revisit . . . regulations that we have in place to ensure that the rules are adequately protecting consumers from cramming.”