FTC Accuses T-Mobile of Skimming Hundreds of Millions From 'Bogus Charges'
T-Mobile is making waves again in the telecommunications industry, but unlike previous "Un-carrier" shakeups, this one's going to anger some consumers. Federal regulators filed a lawsuit against T-Mobile Tuesday in Seattle, alleging that the nation's fourth-largest carrier burdened customers with "bogus charges."
The Federal Trade Commission accused T-Mobile of skimming hundreds of millions of dollars from customers through fraudulent SMS charges. T-Mobile had teamed up with third-party providers that sent novelties such as horoscopes, flirting advice, and celebrity gossip typically at a charge of $9.99 a month. T-Mobile supposedly collected 35-40 percent of these charges, and continued to apply the services even after the company discovered the charges were not legitimate.
"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."
The worst part is that the charges are applied to the phone bill without customer authorization, a practice known as "cramming," and a fact that has fueled a large number of refund requests for T-Mobile. Adding to the severity is the fact that pre-paid customers do not receive monthly bills, and the cramming charges come under vague titles like "8888906150BrnStorm23918," which the customer is supposed to interpret as recurring.
T-Mobile did take action against cramming last year in November, when it joined AT&T, Verizon, and Sprint in stating they would stop charging for third-party texting services.
Eccentric and usually combative (now defensive) T-Mobile CEO John Legere has not taken kindly to the accusations.
Before you get carried away with these sensational headlines, let’s get all the facts out there! https://t.co/5SFIzCi080
— John Legere (@JohnLegere) July 1, 2014
"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," reads a T-Mobile response from Legere.
"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."
T-Mobile has been one of the fastest growing carriers in the industry as of late thanks to a series of "Un-carrier" moves that have done away with archaic industry practices like contracts and overages. The company is under regulatory scrutiny due to a possible merger with Sprint. Lawmakers feel that T-Mobile's maverick status should keep it alone in order to drive change in the wireless sector.
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