FTC Accuses T-Mobile of Overcharging

July 2, 2014

The Federal Trade Commission is taking legal action against cell phone carrier T-Mobile, accusing it of illegally earning hundreds of millions of dollars by placing illegitimate charges on some customers’ cell phone bills for premium texting services that customers say they never authorized, The New York Times reports.

The FTC alleges that customers may have received fees on their bill for services such as “flirting tips, horoscope information or celebrity gossip,” which typically amounted to $9.99. FTC regulators also allege that T-Mobile permitted the third-party charges since 2009 and that some customers may have been charged for “years after becoming aware of signs that the charges were fraudulent.”

The FTC says many consumers were likely unaware that they had been overbilled, since the company’s online billing statements often do not provide a breakdown of the charges coming in from third parties. Also, customers with prepaid phone plans may not receive a bill, and the amount was automatically deducted from their accounts.

The FTC case against T-Mobile marks one of the largest brought by regulators against a major telecommunications company for unauthorized billing, also dubbed “cramming,” The New York Times reports.

John Legere, T-Mobile’s chief executive, wrote in a statement that the FTC’s accusations were without merit. Legere said the company last year stopped allowing third-party companies to impose charges and that it offered refunds to customers who were improperly billed.

“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,” Legere said. “The FTC’s lawsuit seeking to hold T-Mobile responsible for their acts is not only factually and legally unfounded, but also misdirected.”

The FTC is seeking refunds for customers and to permanently prevent T-Mobile from participating in cramming.

“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,” says FTC Chairwoman Edith Ramirez. “The FTC’s goal is to ensure that T-Mobile repays all its customers for these crammed charges.”

The FTC accusations come at a time when T-Mobile has made recent news headlines for reportedly been in talks with fellow carrier Sprint for a possible merger.

Source: “U.S. Accuses T-Mobile of Overbilling,” The New York Times (July 1, 2014)