FTC: T-Mobile Allowed Bogus Charges on Customer Bills (PCMagazine)

• BY CHLOE ALBANESIUS
• JULY 1, 2014 

In a statement, T-Mobile CEO John Legere said the FTC complaint is "unfounded and without merit."

The Federal Trade Commission today filed suit against T-Mobile for failing to stop bogus charges on customers' bills.

In a complaint filed in federal court in Seattle, the FTC said that T-Mobile made "hundreds of millions of dollars" by charging customers for premium SMS subscriptions. These services - which ran $9.99 per month for things like flirting tips, horoscope information, or celebrity gossip - were added to T-Mobile users' bills by scammers without the customer's authorization.

When customers complained, however, T-Mobile continued to bill some users for years, the FTC said. The carrier then made anywhere from 35 to 40 percent of the total amount charged to consumers.

"T-Mobile knew about these fraudulent charges and failed to take any action," FTC Consumer Protection Director Jessica Rich said during a Tuesday conference call with reporters.

Meanwhile, the FTC alleges that T-Mobile's bills were so complicated that customers could not easily decipher what the excess charges covered. They were hidden in a section called "Usage Charges" and sometimes described by indecipherable letters and numbers, like "8888906150BrnStorm23918."

Ideally, the FTC wants the court to require T-Mobile to issue refunds to affected customers. Rich declined to provide an exact number of affected customers, saying only that "it's a lot of consumers." The complaint covers cases going back to 2009.

"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," FTC Chairwoman Edith Ramirez said in a statement. "The FTC's goal is to ensure that T-Mobile repays all its customers for these crammed charges."

In a statement, T-Mobile CEO John Legere said the FTC complaint is "unfounded and without merit."

Legere pointed to a pledge it made alongside Sprint and AT&T last year to stop charging for spam or "premium" texts, and said T-Mobile "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," Legere continued.

Legere said the third-party providers, not T-Mobile, should be held accountable for the bogus charges. "The FTC's lawsuit seeking to hold T-Mobile responsible for their acts is not only factually and legally unfounded, but also misdirected," he said.

The FTC also said it is working with the Federal Communications Commission, which will probe T-Mobile's practices. Both agencies have tackled so-called phone cramming, with the FTC filing its first complaint last year

"Consumers should not be charged for services that they did not order," said Travis LeBlanc, Acting Chief the FCC's Enforcement Bureau. "We will coordinate our investigation with the FTC, and use our independent enforcement authority to ensure a thorough, swift, and just resolution of the numerous complaints against T-Mobile."