T-Mobile is in the crosshairs of a lawsuit by the Federal Trade Commission alleging they bilked customers out of hundreds of millions of dollars via bogus charges. The complaint and potential decision in the lawsuit could have ripples throughout the mobile marketplace. From Fox 32:
The complaint alleges that T-Mobile billed consumers for subscriptions to premium text services such as $10-per-month horoscopes or updates on celebrity gossip that were never authorized by the account holder. The FTC alleges that T-Mobile collected as much as 40 percent of the charges, even after being alerted by other customers that the subscriptions were scams.
“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 Chair Edith Ramirez 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 called the allegations “unfounded and without merit.”
The practice of signing up customers for bogus third-party charges, also known as “cramming,” is nothing new and something that T-Mobile doesn’t really deny happening. The problem is with how T-Mobile presented the charges to their customers according to the FTC. From MSN:
In this case, the FTC said, most T-Mobile customers never agreed to sign up for the services but were billed anyway.
T-Mobile says it tried to put consumer protections in place, but that many of the third-party vendors acted irresponsibly. The FTC counters that T-Mobile should have been tipped off that these text services were scams because of the high rate of customer complaints.
The FTC also alleges that T-Mobile often hid the charges, making it almost impossible for customers to protest. Regulators estimate that T-Mobile kept as much as 40 percent of the bogus charges, resulting in hundreds of millions of dollars.
The FTC claims to have been in contact with T-Mobile for months to ensure refunds for customers, but talks fell apart, leading to the current situation. The Federal Communications Commission is investigating the allegations on their own and will levy fines if they find the FTC findings to be true.
What this means for the possible Sprint/T-Mobile merger, but it would be smart to keep an eye on what happens. Dan will be around tomorrow to cover how this could affect you, but for now you can take the FTC’s advice if you’re worried:
The FTC said consumers should contact their wireless provider if they fear they are a victim of cramming. They also can file a complaint with the FTC.
One way for consumers to try to prevent fraudulent charges is to ask their providers to block all third-party businesses from providing services on their phones. (via)