updated 03:30 pm EDT, Tue July 1, 2014
Complaint alleges services willfully ignored and hidden by T-Mobile
[Update: T-Mobile statement added] In a complaint filed today, the US Federal Trade Commission (FTC) is charging wireless service provider T-Mobile with making hundreds of millions of dollars by placing charges on mobile phone bills for purported "premium" SMS subscriptions that may have been bogus charges never authorized by its customers. According to the FTC's charges, T-Mobile continued to bill its customers for these services offered by scammers years after becoming aware of signs that the charges were fraudulent.
In a process known as "third-party billing," a phone company places charges on a consumer's bill for services offered by another company offering services like weather reports, horoscope information or celebrity gossip. Carriers receive a substantial percentage of the amount charged. When the charges are placed on the bill without the consumer's authorization, it is known in the industry as "cramming."
The FTC's complaint alleges that in some cases, T-Mobile was charging consumers for services that had refund rates of up to 40 percent in a single month, dating back to 2012. Because such a large number of people were seeking refunds, the FCC believes it was a good point of data that should have been heeded by T-Mobile that the charges were never authorized by its customers.
The "Premium Services" heading under which the charges were listed could only be seen after clicking on a separate heading called "Use Charges." The FTC believes that T-Mobile made it intentionally difficult to find the charge, as well as who was charging it, by hiding it in this manner. In addition, the complaint notes that consumers who use pre-paid calling plans do not receive monthly bills, and as a result the subscription fee was debited from their pre-paid account without their knowledge.
T-Mobile allegedly has refused refunds to customers, offering only partial refunds of two months' worth of the charges to others. In other cases, the carrier instructed consumers to seek refunds directly from the scammers -- without providing accurate contact information to do so.
The FTC's complaint seeks a court order to permanently prevent T-Mobile from engaging in mobile cramming, and to obtain refunds for consumers and disgorgement of T-Mobile's profits from the endeavor. The Commission vote authorizing the complaint passed unanimously.
Update: CEO of T-Mobile John Legere believes the suit has been "sensationalized" by the FCC. He writes that "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."