FTC sues T-Mobile for ‘cramming’ customers with bogus charges

In a Complaint filed in a federal court in Seattle, the Federal Trade Commission (FTC) accused T-Mobile of bilking its customers out of hundreds of millions of dollars through a shady practice known as “cramming.”

T-Mobile allegedly placed charges on mobile phone bills for purported “premium” third-party SMS subscriptions that, in many cases, were never authorized by its customers. The practice is known as “cramming” because the bogus charges are “crammed” onto the customer’s bill.

The subscriptions charged to consumers were for contents like flirting tips, horoscope information or celebrity gossip, typically costing $9.99 per month. The FTC claims that T-Mobile received anywhere from 35 to 40 percent of the total amount charged for the unauthorized services. According to the FTC’s complaint, T-Mobile, in some cases, continued to bill its customers for years after becoming aware of signs that the charges were fraudulent.

“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 Chairwoman, Edith Ramirez, in a news release. “The FTC’s goal is to ensure that T-Mobile repays all its customers for these crammed charges.”

The FTC points out that, as early as 2012, T-Mobile was receiving a large number of complaints and customers seeking refunds. So much that it should have been an “obvious sign” that the charges were never authorized by its customers.  To make matters worse for the mobile carrier, T-Mobile’s phone bills could be upwards of 50-pages, making it nearly impossible for consumers to find and understand third-party subscription charges. Thus, the refund rate likely significantly understates the percentage of consumers who were crammed, according to FTC.

T-Mobile’s President and CEO, John Legere, naturally denied the whole thing, calling the lawsuit “unfounded” and “without merit.”