T-Mobile has allegedly been "cramming" bogus charges into users' cellphone bills, making hundreds of millions of dollars and funneling cash to third-party "premium" content services that customers never signed up for.
The allegations came in a complaint against T-Mobile filed by the Federal Trade Commission Tuesday, which explained that the typical "crammed" charge on a T-Mobile bill was $9.99 per month for "content such as flirting tips, horoscope information or celebrity gossip."
T-Mobile wasn't selling the horoscope/gossip/dating advice content directly, but by placing the charges directly on customers' bills on behalf of the content producers, T-Mobile got a cut of the monthly charges — as much as 40 percent, the FTC alleged.
Customers didn't take the bills lying down.
Refund rates — the percentage of customers demanding that a charge be removed from their bill because they never authorized it — reached as high as 40 percent in one month for the "premium" content in question, which the FTC said should have sent a clear signal to T-Mobile that the charges were fraudulent.
But T-Mobile kept on "cramming," even as "the refund rate likely significantly understate[d] the percentage of consumers who were crammed," the FTC said.
The bogus charges were buried in bills that could run longer than 100 pages, the FTC said, and even when a customer took the time to look up the charge, they would find abbreviated jumbles such as "8888906150BrnStorm23918" instead of a clear explanation for the $9.99 charge.
It gets worse, the FTC claims:
When consumers were able to determine they were being charged for services they hadn’t ordered, the complaint alleges that T-Mobile in many cases failed to provide consumers with full refunds. Indeed, the FTC charged that T-Mobile refused refunds to some customers, offering only partial refunds of two months’ worth of the charges to others, and in other cases instructed consumers to seek refunds directly from the scammers – without providing accurate contact information to do so.
The complaint also notes that in some cases, T-Mobile claimed that consumers had authorized the charges despite having no proof of consumers doing so.
According to the FTC, the lawsuit against T-Mobile has two aims: to stop T-Mobile from "cramming," and to get restitution for swindled customers.
"We did engage with settlement negotiations with T-Mobile but we were not able to reach a settlement," FTC Consumer Protection Director Jessica Rich said during a conference call about the lawsuit Tuesday.
T-Mobile CEO John Legere called the complaint "unfounded and without merit" in a statement Tuesday.
"We have seen the complaint filed today by the FTC and find it to be unfounded and without merit," Legere said. "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."
Legere said the FTC's "sensationalized legal action" about "cramming" was baseless, slipping some corporate lingo into his statement, referring to T-Mobile as "the Un-carrier."
Whether the court will find T-Mobile guilty of the accusations remains to be seen, but FTC Consumer Protection Director Rich said the complaint should serve as a reminder to all consumers to be vigilant.
"Consumers should read their bills closely and quickly contact their carriers if they see any unauthorized charges," Rich said.
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