01
Jul
TMobile-Thumb

Update: Well that didn't take long. Here's what T-Mobile had to say in response.

We have seen the complaint filed today by the FTC and find it to be unfounded and without merit.  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 Legere, CEO of T-Mobile USA

The Federal Trade Commission is going after T-Mobile for bringing in hundreds of millions of dollars due to fraudulent phone bill charges. The carrier allegedly charged customers for "premium" SMS subscriptions that were often not authorized and were subsequently difficult to find on both digital and paper versions of the bill.

These subscriptions were for the likes of horoscropes, celebrity gossip, and flirting tips - content that third-parties, not T-Mobile, promised to provide. Yet the carrier is still at fault here. In a process known as third-party billing, a phone company places charges for services offered by another and receives a percentage of the total amount. The FTC claims that T-Mobile pulled in up to 40% of the fees it charged for these subscriptions, which typically cost $9.99 per month.

Customers sought refunds at such a high rate that, the FTC asserts, it was obvious these charges were never authorized in the first place. Nevertheless, T-Mobile allegedly refused to provide refunds to some customers and offered only partial ones to others.

T-Mobile

The FTC wants to permanently prevent T-Mobile from engaging in this practice in the future and is pushing the carrier to provide refunds to its customers. T-Mobile, apparently seeing this coming, already announced that it would no longer allow third-parties to bill customers for premium SMS services early last month. Heck, T-Mobile announced plans to drop premium text services late last year and published a FAQ alerting readers of what was to come. The company intends to reach out to customers and provide refunds starting this month on through September.

Regardless, we want to see what kind of apology John Legere issues for this one, because for a company asserting how uncarrier it is, this is pretty carrier behavior. See the press release below for more of the super shady details.

FTC Alleges T-Mobile Crammed Bogus Charges onto Customers' Phone Bills
T-Mobile Was Aware For Years that Charges Were Not Authorized by its Customers

WASHINGTON, July 1, 2014 /PRNewswire-USNewswire/ -- In a complaint filed today, the Federal Trade Commission is charging mobile phone service provider T-Mobile USA, Inc., with making hundreds of millions of dollars by placing charges on mobile phone bills for purported "premium" SMS subscriptions that, in many cases, were bogus charges that were never authorized by its customers.

The FTC alleges that T-Mobile received anywhere from 35 to 40 percent of the total amount charged to consumers for subscriptions for content such as flirting tips, horoscope information or celebrity gossip that typically cost $9.99 per month. According to the FTC's complaint, T-Mobile in some cases continued to bill its customers for these services offered by scammers years after becoming aware of signs that the charges were fraudulent.

"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."

In a process known as "third-party billing," a phone company places charges on a consumer's bill for services offered by another company, often receiving a substantial percentage of the amount charged. When the charges are placed on the bill without the consumer's authorization, it is known as "cramming."

The FTC's complaint alleges that in some cases, T-Mobile was charging consumers for services that had refund rates of up to 40 percent in a single month. The FTC has alleged that because such a large number of people were seeking refunds, it was an obvious sign to T-Mobile that the charges were never authorized by its customers. As the complaint notes, the refund rate likely significantly understates the percentage of consumers who were crammed. The complaint also states that internal company documents show that T-Mobile had received a high number of consumer complaints at least as early as 2012.

The FTC has made significant efforts to end mobile cramming. In the last year, in addition to holding a public workshop on mobile cramming, the Commission has filed several lawsuits against alleged mobile cramming operations Jesta Digital, Wise Media, and Tatto Inc.According to today's complaint, T-Mobile billed its customers for the services of these FTC defendants as well as an operation sued by the Texas Attorney General.

The complaint against T-Mobile alleges that the company's billing practices made it difficult for consumers to detect that they were being charged, much less by whom. When consumers viewed a summary of their T-Mobile bill online, according to the complaint, it did not show consumers that they were being charged by a third party, or that the charge was part of a recurring subscription. The heading under which the charges would be listed, "Premium Services," could only be seen after clicking on a separate heading called "Use Charges." Even after clicking, though, consumers still could not see the individual charges.

The complaint also alleges that T-Mobile's full phone bills, which can be longer than 50 pages, made it nearly impossible for consumers to find and understand third-party subscription charges. After looking past a "Summary" section as well as an "Account Service Detail" section, both of which described "Usage Charges" but did not itemize those charges, a consumer might then reach the section labeled "Premium Services," where the crammed items would be listed.

According to the complaint, the information would be listed there in an abbreviated form, such as "8888906150BrnStorm23918," that did not explain that the charge was for a recurring third-party subscription supposedly authorized by the consumer. In addition, the complaint notes that consumers who use pre-paid calling plans do not receive monthly bills, and as a result the subscription fee was debited from their pre-paid account without their knowledge.

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.

The FTC's complaint seeks a court order to permanently prevent T-Mobile from engaging in mobile cramming and to obtain refunds for consumers and disgorgement of T-Mobile's ill-gotten gains.

The FTC thanks the Federal Communications Commission and its Enforcement Bureau for their invaluable assistance with and close cooperation and coordination in this matter.

The Commission vote authorizing the staff to file the complaint was 5-0. The complaint was filed in the U.S. District Court for the Western District of Washington.

NOTE: The Commission files a complaint when it has "reason to believe" that the law has been or is being violated and it appears to the Commission that a proceeding is in the public interest. The case will be decided by the court.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC's online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC's website provides free information on a variety of consumer topics. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.

SOURCE Federal Trade Commission

Bertel King, Jr.
Born and raised in the rural South, Bertel knows what it's like to live without 4G LTE - or 3G, for that matter. The only things he likes sweeter than his tea are his gadgets, and while few objects burn more than a metal phone on a summer day, he prefers them that way anyway.

  • http://nopenopenope.nope Ryuuie

    I took one look at the headline and seriously laughed REALLY fucking hard.

    You go, T-Mobile. Try to look like the "good guy" and say derogatory bullshit against your competitors when you're doing the same shady shit they do.

    Never change. :3

    • NinoBr0wn

      That's a rather one dimensional way to look at it. Especially when only reading the headline.

      • http://nopenopenope.nope Ryuuie

        Nope. No sympathy for them, not from me. If you say shit like "your competitors are raping you". then you better make damn your you're squeaky clean. T-Mobile clearly isn't.

        Though, I don't know what I expected...they are a business after all.

        But trust me, I read the article. It was even more amusing if you take into account all the "holier-than-thou" bullshit their CEO likes to pull all the time.

        • Odoyle

          Must have been part of "Uncarrier 2.3.1.2.2"...

        • http://turbofool.com Jarrett Lennon Kaufman

          I know, right? How DARE they call out their competitors, when they, themselves... oh, cleaned up their act already quite some time ago and aren't actually doing this at all. Huh. Well, THAT's not as much fun as being sanctimonious, is it?

    • http://www.jaxidian.org/update teh Jax

      If you had read the article, you would have realized they actually stopped allowing this to happen back in November and about a month ago put a program in place to proactively refund customers all of this money.

      But as you said: You looked at the headline and proceeded to bash.

      • http://nopenopenope.nope Ryuuie

        Again, no sympathy from me for them. They clearly do the same shit their competitors do but just won't admit to it and would rather cater to the Internet crowd by being edgy and shit. :v Ah well.

        EDIT: Besides, I have a fucked up sense of humor. :3

        • http://www.jaxidian.org/update teh Jax

          But they did admit to it!

          That said, you're allowed to have your f'd up sense of humor. I approve of such things!!! ;-)

        • Jeez

          You genuinely have no idea what actually happened here.

          That's okay. Some people feel the need to reduce complicated situations into high-school style teenage drama "shady shit...edgy and shit..."

          It's fine, some people revel in ignorance. You can be said person :)

    • Christopher Bement

      >I took one look at the headline....

      And now you sound like a retard for failing to read the article.

  • Net Workdood

    To be fair, all of the big carriers have been doing this - especially AT&T...and, if people just used common sense then they could avoid those types of charges...I put the blame just a much if not more on the customers...

    • http://www.androidpolice.com/ David Ruddock

      The issue here is the charges aren't authorized by the subscriber. T-Mobile should be asking before it charges them.

      • NinoBr0wn

        How does it get authorized?

        • http://www.androidpolice.com/ David Ruddock

          T-Mobile simply accepted a statement from the 3rd party text scammers that the subscriber had authorized the charge, never asking the subscriber themselves. There should very obviously be a check in place for something so easily abused, the particular mechanism isn't really relevant.

          • Net Workdood

            You do realize that someone has to input a phone number in order to get the subscription, right?

          • Name Withheld

            Someone had to, but i'm pretty darn sure it wasn't me.
            T-moble couldn't even identify where the "charges" on my bill were coming from.
            And i got multiple charges in the course of a single minute. None of which ever showed up in my text app.

            So how could that be legit?

        • http://www.jaxidian.org/update teh Jax

          SMS Spam: "Want XXXX? Respond YES if so! Respond NO otherwise."

          What the message would have said if it was honest: "Respond in any way for $10/mo fees. Ignore otherwise."

      • Net Workdood

        I used to work for AT&T and I know the stuff they do - however, many times it is the customer's fault when doing it - they go online to subscribe to something and do not read all of the details. Now, sometimes, those details are not always spelled out. AT&T finally fixed their issues with several ways to prevent it from happening, including texting the account owner. I am with T Mobile now, had Verizon and AT&T before, and I never had a problem with premium SMS subscriptions as you just need to use common sense as a consumer and know what your kids are doing...
        Your last sentence is a good one, and it would act as an additional safeguard - you can always turn off Premium SMS stuff in your account settings...

        • Caveat Emptor

          I concur. I worked at T-Mobile in a call center and from that experience, I know to put blocks on my lines to prevent 3rd party charges.
          I was jus saying the same thing you said, Net, on my Facebook yesterday.
          All the stupid little accounts that you sign up for for random things may ask for your phone number. If they do, check the fine print before you sign up because there may be a fee associated with it.

      • http://turbofool.com Jarrett Lennon Kaufman

        Did any of the carriers ask? I remember my mother and ex-wife's mother ending up with these services on our Sprint account and nobody authorized it, and I knew of people with AT&T and Verizon with the same issues. I don't get how this is any different for T-Mobile.

      • Name Withheld

        The issue for me is that the "texts" never even showed up in my text app. They *only* appeared on my bill. Sometimes i got several of these "texts" on my bill in the course of the same minute.

        I was just refunded $3.80 from t-mobile because of this article. Still have to go back to bills from the previous months..

    • http://www.androidpolice.com/ Shawn De Cesari

      Are you engaging in VICTIM BLAMING?!?! Well, good. You're absolutely right in this case. When the victim's to blame, blame him.

      When this kind of stuff happens, it's usually due to a lack of common sense. Of course, as you correctly said, every carrier does this. Profiting off of stupidity isn't a crime in this country and has been going on as long as there have been humans on this planet. Nothing to see here folks, move along. *yawn*

      • Name Withheld

        Anyone who pays money for text messages is stupid. I'd agree with you there.
        But in this case, I'm pretty darn sure i didn't authorize it, T-mobile can't tell me where they are coming from, and nothing shows up on text app, only on my bill.

        But thanks for sticking up for ole t-mobile. i'm sure they don't have any lawyers to do that already.

  • Alvin Brinson

    The point that got buried deep in the article here is that T-Mobile has already ended the practice before this "report" even became public.

    Yes it's not very "unCarrier". It is very difficult for a new CEO to change every single dustpan in every linen closet immediately. Legere has changed a lot at T-Mobile and it looks like this is being quietly added to the list of changes.

    Yet people are condeming the "new" T-Mobile for legacy practices that they've already stopped?

    You could compare this to the GM saftey recall scandal, for example. Except that in the GM recall, lives were lost. And, the "New" GM continued to deny problems until they were forced publicly to do something about it. In this case the "New" TMO already took action.

    • http://www.androidpolice.com/ Shawn De Cesari

      This man gets it. Kudos to you, sir.

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    • Odoyle

      I know my issue probably isn't related, but I got charged for T-Mobile TV, and all I did was hit the "Open" button after an update from within the Google Play store (and closed it immediately), and that was only 2 months ago... There was nothing saying that I'd get charged for it at any point I had it open. When I called about it, they did remove the charge, but I still thought it was pretty shady..

      • Firehawkws7

        Uhh...You should read the fine print. It absolutely says you'll be charged if you use the app past a certain amount of days;

        • Odoyle

          Uhh... This url on T-Mobile's site says otherwise:

          http://support.t-mobile.com/docs/DOC-4135

          Second to last heading in the How-To's says:

          "Determine if content is free or must be purchased.."

          So, just opening the app, without viewing any content does not constitute a monthly fee. There is also free content within the app that requires no subscription, like the self help and support videos listed in the first section of the above mentioned "How-to". I've read the fine print, that's why I got the refund.

    • Daniel Marcus

      I tend to agree. It's also likely that this has been a business practice so long (and is so obvious to avoid if you ignore those stupid messages) I doubt it even came up on the radar of the higher-ups until just recently. It sounds like whoever was responsible for it was already changing it anyway to match with the newer company philosophy. I actually see that as a good sign, it means that they're embracing "uncarrier" on a company level, not just an advertising level.

    • Name Withheld

      No they certainly didn't end this practice. I am still getting these charges. They are untraceable and I didn't authorize them.

      Also, they don't show up in my text messaging app, only on my bill.

      They come multiple charges in the course of several minutes, and they are not from an actual phone number.

      I thought they were some sort of software glitch till I read this article.

      Just talked to t-mobile and after a run-around, they agreed to block and then refund them.

      The billing lines show Directtoconsume, from number 2 2300.

      • Alvin Brinson

        To be fair, it seems their decision to end the practice is very recent and your bills may not have caught up completely.

        Sounds like you're on your game getting them refunded. Now just make sure everyone on your plan knows how important it is to avoid even responding to texts.

        At one time it was recommended to send a "STOP" message to unsolicited texts. Unfortunately, that "STOP" message is sometimes now used as a sort of confirmation of a valid SMS number and can itself trigger a slamming attempt. The best option is to simply ignore such texts.

        • http://www.jaxidian.org/update teh Jax

          So true! People think saying "NO" or "STOP" will make them stop but sometimes that message is actually used to *START* charging you!

    • joser116

      I I think this lawsuit is misdirected. It should instead be directed at the providers of those SMS services who got the customers into their services without their knowledge.

    • Timothy Anderson

      Exactly! I am a T-Mobile customer and I can tell you that NONE of the others are as up front and honest about their charges. My bill is exactly the same each month, regardless of usage. (Can't say the same for any of the other carriers) The point is why are they bringing this up now? I suspect that their competition is behind it and that they are actually pulling the strings. Just like they have Tom Wheeler (current FCC chairman who used to be a lobbyist for the wireless industry!) in their back pocket. ... so corrupt.

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      • Kev

        This just isn't true. I have tmobile and they have fraudently charged me many times. Twice with the exact same scandal that this article is about. They once resolved it but it took time on my part to get them to fix the charges. The resolution was that I buy their protection plan and that is a scam in itself

        • http://www.jaxidian.org/update teh Jax

          I dealt with ~5 different T-Mobile reps (different calls) regarding some of these charges (that I'm sure my mother-in-law triggered). Every single one of them was willing and trying (to a limited success initially but eventually total success) to refund 100% of 6-7 months of these charges NO QUESTIONS ASKED. I resisted absolutely ZERO resistance to these refunds other than what seemed like bad systems they were using to make the refunds happen so the money got pulled from the scamming SMS companies.

          To repeat: FIVE reps wanted to refund 100% of 6+ months of these fees with NO QUESTIONS ASKED. Perhaps I'm in the minority but that's my experience.

  • Nathan Walters

    ...people pay $10 a month for flirting tips?

    • saf1927

      You'd be surprised by how much some people would pay for some of the most ridiculous things lol

  • Bryan Pizzuti

    I think T-Mobile made someone angry. But not for the reasons listed in the article. Funny the timing of this, considering it's done with as of a while ago.

  • kabloink

    One of the many reasons why I use prepaid now days. No mysterious fees or other bs charges showing up.

  • Bannage!

    Just ban these companies form doing SMS charging.

  • Tristan Hammond
  • n_a_v

    I only get my flirting tips via SMS

  • hp420

    I'm going to start by saying I'm a tmo customer, and I have no plans of switching, because I love them....but seriously, how about just admitting it when you screw up, instead of every single time just pointing at the competition and saying 'yeah, but they are worse' just admit it....'yeah, we fucked up and we're working hard to correct it. sorry for any inconvenience' is that so damn hard??? This is like watching two 5 year old siblings fight....'but he puched me in the face first!!'

  • http://twitter.com/jdrch jdrch

    Good thing I'm on Verizon.

    • dude

      ..................................................................yeah okay.

    • neopanther

      Good thing? With all your unlimited data and everything. Verizon is the biggest criminal in the bunch.

      • http://twitter.com/jdrch jdrch

        @neopanther:disqus They're expensive and restrictive, but at least they're not defrauding customers.

  • Zimmerman

    When's the congressional hearing going to be?

  • neopanther

    I worked for Sprint two different times. One for tech support. In training the first time when the teacher was showing us a bill I asked: "What is that 20.00 charge for (this was 1999)? She said the FTC regulates...greeble greeble...jibber jabber...I said: "English please." She said: "We charge it because we can get away with it." My brother is a assistant manager for a Sprint store and a DM was teaching them how to "spin" and "sidestep" customer's complaints about falsified bills. Charging people upgrade fees for new accounts even if the person brought their own phones. We need to get revenge on the industry. PERIOD. They are getting over like fat rats. It reminds me of when 1800 collect and all those calling card companies were getting over on people when they used to charge for long distance and extremely high home phone services. Now home phones are cheap as hell because who wants home phone service. It's up to us to punish these criminals for their actions.

  • rcozzi

    Does the word "rape" come to mind?

  • Bobby Foster

    Why is it that everyone in these comments that had these "magical" charges show up on their bill without warning is hiding their names. If you don't look at each bill every month and decide that months or years later you deserve a credit for something you paid for without question before you even looked at your bill...you are insane. Look at every bill every time no matter what. How dumb are you. You seem like the kind of person who would pay for HBO for a year then demand a credit because you never watched it. Those sneaky cable companies always making me pay for shows i don't want and didn't watch. I think I should sue

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  • JG

    Is there any mention as to why T-Mobile has been singled out for this "honor"? I doubt these services are only available to T-Mobile customers. More likely than not they are available to Verizon, AT&T and Sprint customers as well... Or at least were available previous to everyone stopping the billing years ago...

    And why is the FCC just going after T-Mobile? Are not the premium texting services just as at fault? They're taking 60% of the revenue - a lot more than T-Mobile is getting... Granted there are probably hundred SMS services vs only one T-Mobile, so it'd be easier going after T-Mobile than all of the various services themselves.