T-Mobile Throws In The Towel, Agrees To $90M ‘Cramming’ Settlement With FTC

AT&T agreed to settle with the Federal Trade Commission (FTC) to the tune of $105 million in early October for its part in a “cramming” scheme that bilked customers out of millions of dollars. Cramming refers to any unauthorized charges on a customer’s cell phone bill, and typically come in the form of unsolicited text messages.

Today is T-Mobile’s turn, as it has agreed to a settlement with the FTC and will pay at least $90 million. That sum will be compromised mostly of consumer refunds, but $18 million will go towards fines and penalties owed to all 50 states and $4.5 million will go directly into the Federal Communications Commission’s (FCC’s) pockets.

The FTC just poured a bucket of cold water on T-Mobile (Source: T-Mobile)

“Mobile cramming is an issue that has affected millions of American consumers, and I’m pleased that this settlement will put money back in the hands of affected T-Mobile customers,” explained FTC Chairwoman Edith Ramirez. “Consumers should be able to trust that their mobile phone bills reflect the charges they authorized and nothing more.”

“For too long, millions of consumers have been scammed -- billed for bogus charges on their phone bills for services they didn’t request. This is unacceptable,” added FCC Chairman Tom Wheeler in a statement [PDF]. “I look forward to working with our federal and state partners in to crack down on cramming and protect America's consumers."

(Source: FTC)

T-Mobile will now have to get direct permission from customers before third-party charges can be applied to any bill. And even if customers do give their consent, T-Mobile must also notify them when a third-party charge is authorized. With these safeguards in place, the companies that have profited from these cramming schemes in the past should hopefully start dropping like flies. And we can’t completely absolve companies like AT&T and T-Mobile either, because they both received a kickback from each and every unauthorized charge applied to a customer’s bill (anywhere from 30 to 40 percent of the charge according to PC Magazine).

Sprint is likely to be next in line, as the FCC is preparing to levy a $105 million fine against America’s third-place wireless carrier. With AT&T, T-Mobile, and Sprint already under the gun, it’s only a matter of time before the nation’s largest wireless carrier, Verizon Wireless, feels the heat.