T-Mobile has agreed to pay the FTC and FCC a total of $90 million to settle charges that the company was allowing third-party premium messaging services to charge customers for unwanted services and being complicit in the activity during the process by collecting up to 40% of the revenue collected from the services as recently as 2012 while ignoring the majority of customer complaints regarding the charges.
Following an investigation confirmed in July, both regulators found T-Mobile guilty of the charges by “engaging in an unjust and unreasonable practice of billing consumers for products or services they had not authorized; and failing to provide a brief, clear, non-misleading, plain language description of the third-party charges on the telephone bills sent to consumers” according to a statement made by the FCC.
$67.5 million of the fine will be set aside to repay customers who have claimed they were overcharged and T-Mobile will also pay $18 million to all fifty U.S. states and the District of Columbia, in addition to $4.5 million to the U.S. Treasury.
As part of the consent decree, T-Mobile is also prohibited from charging customers for third-party Premium SMS products and services. It also requires T-Mobile to create a system where customers can verify third-party service charges before they appear on monthly billing statements. T-Mobile will also have to block third-party charges at no additional charge and make it easier for customers to identify possible fraudulent charges, as well as provide additional training for customer service staff to properly resolve customer complaints regarding unauthorized charges.
Late last year, the carrier announced along with two others that it tried to regulate premium SMS services, but claimed that its partners were breaking the rules and ended support for premium SMS as a result, while initially agreeing to refund some customers. T-Mobile even stated that it reminded those customers affected to check their eligibility for those refunds at the above link.
The initial FTC/FCC complaint further suggested that T-Mobile often hid third-party charges in difficult-to-understand monthly bills and the regulator also believed that T-Mobile didn’t provide customers with full refunds, flat-out refused to refund some customers, and in some cases told customers to recoup the charges directly from the fraudulent services without providing contact details, which ultimately led to this settlement.
FCC Chairman Tom Wheeler issued the following statement on the settlement:
“Cramming is a significant problem, 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. Today’s settlement is a win for consumers who have been victimized by cramming. It means compensation for T-Mobile customers who were fraudulently billed for third-party services that they did not want or authorize. And it goes one step further. Today’s action will also help protect all of T-Mobile’s customers from bogus third-party charges in the future.”