[Updated] T-Mobile's Response: FTC Throws A Flag At T-Mobile Alleging Bogus Billing Practices
The U.S. Federal Trade Commission (FTC) is accusing T-Mobile, otherwise known as the "Un-carrier" (a name T-Mobile gave itself), of being un-cool by charging its wireless subscribers hundreds of millions of dollars for third-party services they never signed up for. These services include things like ringtones, wallpapers, horoscopes, and other such add-ons.
According to the FCC's complaint, T-Mobile allegedly charged consumers a monthly fee that was typically $9.99 for the above mentioned features. The FTC says that in many cases, the consumers never signed up to receive any of the services, thus T-Mobile is engaging in a practice referred to as "cramming," according to a report in The Wall Street Journal.
"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," FTC Chairwoman Edith Ramirez said. "The FTC's goal is to ensure that T-Mobile repays all its customers for these crammed charges."
Ramirez is referring to the fact that T-Mobile will usually keep around 35-40 percent of the amount these third-party services charge to consumers. According to the FCC's complaint, T-Mobile kept charging its customers for unauthorized services "even after large numbers of consumers complained" about it.
To make matters worse, the FTC claims T-Mobile's billing practices made it overly difficult for consumers to notice the bogus charges or to identify the source.
Update, 7/1/14 5:29PM: T-Mobile has officially responded to the FTC's allegations and claims them to be "unfounded and without merit." Further, the company claims that "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."
It all sounds like a bit of tap-dancing and finger pointing, especially with the whole "bad actors" bit. We'll have to see what unfolds in the weeks ahead but it doesn't sound too good for team magenta.
According to the FCC's complaint, T-Mobile allegedly charged consumers a monthly fee that was typically $9.99 for the above mentioned features. The FTC says that in many cases, the consumers never signed up to receive any of the services, thus T-Mobile is engaging in a practice referred to as "cramming," according to a report in The Wall Street Journal.
"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," FTC Chairwoman Edith Ramirez said. "The FTC's goal is to ensure that T-Mobile repays all its customers for these crammed charges."
Ramirez is referring to the fact that T-Mobile will usually keep around 35-40 percent of the amount these third-party services charge to consumers. According to the FCC's complaint, T-Mobile kept charging its customers for unauthorized services "even after large numbers of consumers complained" about it.
To make matters worse, the FTC claims T-Mobile's billing practices made it overly difficult for consumers to notice the bogus charges or to identify the source.
Update, 7/1/14 5:29PM: T-Mobile has officially responded to the FTC's allegations and claims them to be "unfounded and without merit." Further, the company claims that "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."
It all sounds like a bit of tap-dancing and finger pointing, especially with the whole "bad actors" bit. We'll have to see what unfolds in the weeks ahead but it doesn't sound too good for team magenta.
