FTC Says T-Mobile Was Illegally Cramming

The Federal Trade Commission has filed a complaint against T-Mobile, charging it with continuing to take a cut of hundreds of millions of dollars in third-party billing charges for purported premium subscriptions that were "in many cases bogus," the FTC said, and never authorized by its customers.

The FTC files a complaint when it has reason to believe the law is being broken, in this case the law against deceptive, fraudulent or unfair business practices. It wants the court to to permanently enjoin T-Mobile "from engaging in mobile cramming and to obtain refunds for consumers and disgorgement of T-Mobile’s ill-gotten gains."

According to the FTC, T-Mobile continued to bill customers for services like "flirting tips, horoscope information or celebrity gossip" even after it became aware of "signs" that the charges were fraudulent, collecting between 35% and 40% of the typical $9.99 monthly fee.

“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.”

Third party charges are ones offered by a third party but placed by the phone company on bills, for a percentage of the take. When customers don't know about the charges, the FTC points out, that is "cramming," something it and the FCC have been trying to crack down on.

The FTC said T-Mobile billing practices made it hard for customers to detect they were being charged, "much less by whom." It also alleged that the sometimes 50-plus-page bills were almost impossible to navigate in order to find and identify third-party charges.

It also said that, in some cases, T-Mobile claimed consumers had authorized the charges even though it had no proof that was the case.

“I am deeply disturbed by the FTC’s allegations that T-Mobile allowed millions of dollars in unauthorized charges to be crammed on consumer wireless bills,” said Senate Commerce Committee Chairman Jay Rockefeller. “For more than two years through an ongoing Senate Commerce Committee investigation, I have been closely examining wireless billing practices. The FTC’s allegations only heighten my concern about the industry’s repeated assertions that voluntary oversight effectively protects consumers from cramming.”

The vote to lodge the complaint was 5-0. It was filed in the U.S. District Court for the Western District of Washington.

T-Mobile had not responded to a request for comment at press time. 

The FTC thanked the FCC and the Enforcement Bureau for their "invaluable" help.  The FCC said Tuesday it was investigating cramming complaints against T-Mobile.

"We have seen the complaint filed today by the FTC and find it to be unfounded and without merit," said T-Mobile in a statement. "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.  T-Mobile is fighting harder than any of the carriers to change the way the wireless industry operates and we are disappointed that the FTC has chosen to file this action against the most pro-consumer company in the industry rather than the real bad actors.

"As the Un-carrier, we believe that customers should only pay for what they want and what they sign up for. 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.

"This is about doing what is right for consumers and we put in place procedures to protect our customers from unauthorized charges. Unfortunately, not all of these third party providers acted responsibly—an issue the entire industry faced. We believe those providers should be held accountable, and the FTC’s lawsuit seeking to hold T-Mobile responsible for their acts is not only factually and legally unfounded, but also misdirected."

John Eggerton

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.