How T-Mobile’s Alleged Fraud Could Completely Change The Mobile Industry

Senior Contributor
07.02.14 15 Comments

As you may have heard, T-Mobile stands accused by the FTC of hiding ripoff charges. And it means T-Mobile is in serious trouble, but they’re not the only ones. The fallout of this, if it’s true and the investigation spreads, could be enormous.

What is T-Mobile accused of doing, exactly?

Essentially, assisting in fraud by hiding fake charges you didn’t even sign up for in your phone bill, what’s often called “cramming” in the mobile industry. Basically, you get signed up for a service that charges $10 a month that sends you celebrity gossip, or fart noises, or whatever. Not only is T-Mobile accused of hiding these charges, and taking their cut, they’re also accused of failing to offer proper refunds and keeping consumers in the dark about what’s driving up their phone bill.

I’m a T-Mobile customer. Am I getting ripped off?

Quite possibly! Apparently many ‘customers’ never even signed up for the service they were being billed for, forget actually receiving that service, and in some case merchants just started billing random phone numbers they purchased. The problem is that you might not be aware of this unless you examined your bill very, very closely.

This seems largely T-Mobile’s problem.

And you’d be right, except for one thing: This is the first time the government has gone after a phone provider for cramming. And depending on what they decide, it means everyone else is on the chopping block too. T-Mobile isn’t even pretending cramming isn’t happening, and if it’s happening on one network, it’s probably happening on others.

How much money are we talking about here?

Hundreds of millions, just from T-Mobile. And that’s the tip of the iceberg; if other mobile providers get sucked into this, it could mean billions going back to customers.

So they get some egg on their face, I get some beer money, what’s the big deal?

The big deal is this: If T-Mobile loses hundreds of millions of dollars, that will kill it on the stock market and quite possibly kill the company. Sprint, which isn’t well off, would almost certainly get wiped out. Lots of smaller mobile carriers also probably have cramming problems, also probably took the money, and would also essentially be wiped out. The only companies with a reasonable chance of surviving this are AT&T and Verizon.

Would such infrastructure be allowed to just rot?

No, it would probably be picked up. The likeliest candidate? Google. How would you feel about the world’s biggest data collector not only building the software of your phone, but providing it the bandwidth? Figure that out now, because it might be relevant sooner than you think.

Around The Web