FTC Cracks Down On T-Mobile For Massive Bogus Charges And Fee Scam

from the whoops dept

So you know all that stuff about how T-Mobile has been trying to position itself as the "uncarrier" that actually treats customers right instead of bilking them at every opportunity? Yeah, that would be a lot more convincing if the FTC didn't just come down on the company for bilking millions in bogus charges from people. It appears that T-Mobile was engaged in a form of cramming that signed subscribers up to $9.99/month "subscriptions" to content they'd never asked for:
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.
Not only were the frequent complaints and cancellations of the service a clear sign that T-Mobile should have known these charges were fraudulent, but T-Mobile seemed to go out of its way to disguise the nature of these charges to try to minimize the complaints:
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.
Here's the example the FTC provided showing how T-Mobile hid these bogus charges:
By the way, nice touch by the FTC to use T-Mobile's trademarked magenta color in making that graphic!

And, of course, the story gets worse. Even if people figured out what the hell was going on, and finally got someone on the phone at T-Mobile customer service to sort it out, the company often failed to provide them with full refunds.
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.
T-Mobile has done a bunch of consumer friendly things in the recent past, but these sort of practices suggest that the traditional soul of phone companies, always looking to squeeze extra fees out of users is alive and well within the company.

Filed Under: consumers, cramming, fee scams, ftc, hidden charges
Companies: t-mobile

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  1. identicon
    Anonymous Coward, 1 Jul 2014 @ 10:50pm

    Face it, there are very few telecommunications co. that people -like-

    In my area, there is exactly 1 internet provider that folks like, Grande Communications, but the have very small coverage areas. Great speeds, very reasonable prices, and blow your socks off customer service.

    If you've never heard of NPS(R), or Net Promoter Score,


    it's a way to see how your customers view your business. In open markets, this is of vital importance. If your market consists of almost total regulatory lock in and government monopolies, then it's quite unimportant. Markets like, say, Cell phone, telephone, internet, cable, or satellite TV.

    I've often thought that the telco and cable/satellite business should get a message from the FCC and FTC to the effect of:

    "OK boys, the gloves are OFF. Get your NPS(R) scores up to at least 7 within two years. If you fail at that, then all the restrictions, all the subsidies, all the laws that make you gate keepers go away. Get a score below 5, and the C level executives will be barred for life from holding a management position."

    What I'd really like is for the government to remove ALL the barriers to entry for competition RIGHT NOW. One thing they could do that wouldn't be very difficult at all is make a rule that any frequency spectrum held by a telco that did not have at least 40% utilization over 2 years would go back to auction, and the previous owner would be forever banned from bidding on it again. Some telcos, in my opinion (I'm looking at YOU AT&T) hold vast swaths of RF spectrum with out an ounce of intention of ever putting it into service for customers. It's held simply to keep ILEC's and CLEC's from obtaining it and competing.

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