T-Mobile Gets An FTC Damning For Cramming

T-Mobile CEO John Legere reacted to charges by the feds yesterday that it has been taking up to 40% of hefty-but-bogus third-party texting charges — for “flirting tips, horoscope information or celebrity gossip that typically cost $9.99 per month” — by proclaiming it is the “most pro-consumer company in the industry” and besides, we don’t do things like that anymore.

The Federal Trade Commission announced its complaint with a decidedly un-mincing press release underneath the hed: “FTC Alleges T-Mobile Crammed Bogus Charges onto Customers’ Phone Bills.” 

“Before you get carried away with these sensational headlines, let’s get all the facts out there!” quickly tweeted @JohnLegere, linking to a statement that claims “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.”

Legere’s response also asserts “T-Mobile is fighting harder than any of the carriers to change the way the wireless industry operates” and expressed disappointment that “the FTC has instead chosen to file this sensationalized legal action.”

In any event, “it’s “not exactly the kind of attention [the “colorful” and “passionate” Legere] had in mind,” points out USA Today’s Edward C. Baig. “Over the past year-and-a-half, T-Mobile's outspoken CEO has been hammering away at rivals with a disruptive ‘Un-Carrier’ strategy built around the elimination of restrictive wireless contracts, the willingness to pay Early Termination Fees for consumers who would switch to T-Mobile, and other measures meant to do away with consumer pain points.”

But the FTC evidently doesn’t see it that way.

“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 the release. “The FTC’s goal is to ensure that T-Mobile repays all its customers for these crammed charges.”

The release also blasts T-Mobile for bills that could run longer than 50 pages, “[making] it nearly impossible for consumers to find and understand third-party subscription charges” or who was making them. No wonder, since they carried such un-availing brain storms as “8888906150BrnStorm23918.”

Further, “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.”

Jessica Rich, the agency’s consumer protection director, “said FTC officials engaged in talks with T-Mobile about settling the allegations but were unable to reach a deal,” according to the Los Angeles Times Jim Puzzanghera.

The FTC complaint claimed “that T-Mobile knew in early 2012 that customers were complaining about the charges in increasing numbers and that it had identified several third-party merchants as the subject of those complaints,” report the New York Times’ Edward Wyatt and Brian X. Chen. 

But, the FTC said, “T-Mobile did little to determine whether the customers had authorized the charges” and “refused to give some consumers refunds when they asked for them … or told them it would block future charges and then failed to do so,” write Wyatt and Chen.

Although T-Mobile is singled out in this particular action, cramming seems to be both pervasive and evasive at the same time.

“Verizon settled a class-action lawsuit concerning cramming,” in 2012, writes Brian Fung in the Washington Post, and “a study by the Federal Communications Commission has found that only 1 in 20 people who've been affected by the abuse ever realize anything’s amiss.”

Fung reports that Sen. Jay Rockefeller (D-W. Va.) sent letters in March to AT&T, Verizon, Sprint and T-Mobile “warning that he didn't think the companies had done enough to fight the practice.”

“The regulatory moves come at a bad time” for T-Mobile, point out the Wall Street Journal’s Gautham Nagesh and Thomas Gryta, which has reversed years of subscriber losses with its aggressive, if costly, “Un-carrier” marketing campaign in which it “[pledges]  to be a straight shooter that doesn't rely on the standard industry charges and fees that have annoyed cellphone consumers.” 

And a good time for such a complaint would be?

Tags: pr, telecom
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2 comments about "T-Mobile Gets An FTC Damning For Cramming".
  1. CK JAGUAR from GBG , July 2, 2014 at 9:08 a.m.
    This can never happen with Republic Wireless because they have a flat rate, unlimited, no contract service for $25 a month. No added charges, ever. They also have an unlimited talk and text plan for $10 a month. They sell the MotoX for $299 and the MotoG for $149. I recommend them from personal experience. Use this link to research and get $20 off when you join: http://rwshar.es/Oqvb
  2. Paula Lynn from Who Else Unlimited , July 2, 2014 at 11:15 a.m.
    As always, when the fine is only the cost of doing business and those in charge - more than one or a few are not held personally financially and criminally responsible, these practices will continue with relish.