Menu
FTC: T-Mobile made hundreds of millions from unwanted SMS features

FTC: T-Mobile made hundreds of millions from unwanted SMS features

The mobile carrier made profits from services not ordered by customers, the FTC said

T-Mobile USA made hundreds of millions of dollars by charging customers for purported "premium" SMS subscriptions that, in many cases, they never ordered, the U.S. Federal Trade Commission says.

The FTC, in a legal complaint filed Tuesday, alleged that T-Mobile pocketed 35 percent to 40 percent of the amount charged to customers for SMS-based services such as flirting tips, horoscope information and celebrity gossip, with the services typically costing US$9.99 per month.

T-Mobile, in some cases, continued to bill customers for these services, offered by what the agency called "scammers," years after the company was alerted that the charges may have been fraudulent, the FTC said. The charges were often added to customers' bills through a fraudulent process called cramming, the FTC said. Cramming involves adding charges to bills without customers' approval.

With the allegations against T-Mobile, the FTC has opened a "new front in its long-standing campaign" against cramming, Jessica Rich, director of the FTC's Bureau of Consumer Protection, said during a news conference.

The FTC's goal is to ensure that T-Mobile repays affected customers, added FTC Chairwoman Edith Ramirez. "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," she said in a statement.

A T-Mobile representative wasn't immediately available for comment.

The charges were added to T-Mobile customers' bills through a third-party billing process, in which a phone company places charges on a consumer's bill for services offered by another company, with the carrier sometimes receiving a substantial percentage of the amount charged.

In some cases, T-Mobile charged consumers for services that had refund rates of up to 40 percent in a single month, the FTC said in its complaint. With such a large number of people seeking refunds, it should have been an "obvious sign" to T-Mobile that the charges were never authorized by its customers, the FTC said in a press release.

With typical charge-back requests with percentages in the low single digits, T-Mobile "disregarded telltale signs of fraud," Rich said.

The refund rate likely significantly understates the percentage of consumers who had the charges crammed on their bills, the FTC said. T-Mobile documents show that the company received a high number of consumer complaints as early as 2012, the FTC alleged. The practice goes back to 2009, the FTC said.

T-Mobile's phone bills, which can be longer than 50 pages, made it nearly impossible for consumers to find and understand third-party subscription charges, the FTC alleged.

The FTC has talked to T-Mobile about a settlement in the case, but hasn't been able to reach an agreement, Rich said.

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's email address is grant_gross@idg.com.

Follow Us

Join the New Zealand Reseller News newsletter!

Error: Please check your email address.

Tags U.S. Federal Trade CommissiontelecommunicationregulationCivil lawsuitslegalJessica RichEdith RamirezmobilegovernmentT-Mobile USA

Slideshows

Top 50 defining moments of the New Zealand channel in 2016

Top 50 defining moments of the New Zealand channel in 2016

Reseller News looks back on a tumultuous 12 months for the New Zealand channel, assessing the fallout from a year of sizeable industry change. Whether it be local or global mergers and acquisitions, distribution deals or job changes, the channel that started the year differs somewhat to the one set to finish it - Reseller News assesses the key moments that made 2016.​

Top 50 defining moments of the New Zealand channel in 2016
​Hewlett Packard Enterprise honours high achieving NZ channel

​Hewlett Packard Enterprise honours high achieving NZ channel

Hewlett Packard Enterprise honoured its top performing Kiwi partners at the second running of its HPE Partner Awards in New Zealand, held at a glitzy ceremony in Auckland. Recognising excellence across eight categories - from distributors to resellers - the tech giant celebrated its first year as a standalone company, following its official split from HP in 2015.

​Hewlett Packard Enterprise honours high achieving NZ channel
Nutanix treats channel partners to Christmas cruise

Nutanix treats channel partners to Christmas cruise

Nutanix recently took to the seas for a Christmas Cruise around Sydney Harbour with its Australia and New Zealand staff, customers and partners to celebrate a stellar year for the vendor. With the sun out, they were all smiles and mingled over drinks and food.

Nutanix treats channel partners to Christmas cruise
Show Comments