FTC Says T-Mobile Made Hundreds of Millions From Bogus SMS Charges 110
An anonymous reader writes "Today the FTC filed a complaint (PDF) against T-Mobile USA, alleging the carrier made hundreds of millions of dollars from bogus charges placed on customers' bills for unauthorized SMS services. "The FTC alleges that T-Mobile received anywhere from 35 to 40 percent of the total amount charged to consumers for subscriptions for content such as flirting tips, horoscope information or celebrity gossip that typically cost $9.99 per month. According to the FTC's complaint, T-Mobile in some cases continued to bill its customers for these services offered by scammers years after becoming aware of signs that the charges were fraudulent." FTC chairwoman Edith Ramirez said, "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. 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." According to the complaint, T-Mobile also made it hard for customers to figure out they were being billed for these services, and failed to provide refunds when customers complained."
Here's T-Mobile's response.
T-Mobiles been the best carrier in this regard.... (Score:4, Interesting)
Maybe its got something to do with the fact they offer and offered a variety of pre-paid plans that kept such issues to a minimum for me, but I remember my parents having tons of trouble with Verizon's billing practices. Every month they would be in quibbling over the charges until finally they had them disable SMS altogether. Never have I had an issue with T-Mobile.
T-Mobile and the customer liable here (Score:5, Interesting)
It's funny to see T-Mobile back-peddling on this issue however anybody who could have had the premium services dropped could have done so at any time. For somebody to not review their bill and see that $10/mo was getting charged for this is a bit incredulous. Sprint, hell all the Cell providers have this kind of shit. Having gone through it with teenagers, I can tell you I had to scrutinize the bills monthly. T-Mobile's problem is that their billing and customer service practices make it a pain in the ass to get these things turned off. So there is merit in this suit moving forward but IMO there is no premium SMS service. Shit jokes, daily bikini girl pics. It's another way to bilk you out of your money like 900 numbers. [wikipedia.org] and that's something the FTC should be going after as well.
I'm also wondering about the timing of this with the pending Sprint acquisition. It'll definitely put that on hold, which will force T-Mobile to pay some hefty fine (tax) that you and I will have to pay to cover the costs of giving the government more money. It's funny how that works out: company gets fined and then the same company passes those costs onto consumers.
Re:Deja vu (Score:4, Interesting)
Duh, you didn't read the story, so of course you don't believe they hid anything. You probably don't even know what they're accused of hiding, and maybe not even that they are accused of hiding anything.
The filing linked not only accuses them of hiding the charges, they actually lie about the nature of the charges and instead of listing them as 3rd party charges, they hide them under "Use charges" with no breakout for 3rd party services on the first screen... or even on the click-through screen! You have to find the second hidden click-through, with still nothing listing 3rd party charges.
They're also accused of actually collecting a higher percentage cut... of the subscription services with the highest refund rates! So they clearly detected that those were scams, and instead of dropping the services, they demanded a larger cut. That is a substantial allegation, and it is very hard to come up with an innocent explanation for that difference in their own rates.
They're also accused of burying even their basic permission to charge for 3rd party services in the fine print. That is fine for the details of an agreement, but when a substantial part of the basic relationship is buried there, those provisions are probably not valid. Being bound to whatever the details said is very different than having not been clearly informed of the basic nature of the contract. And the contract is not a CC contract, it is a contract for specific telecommunications services.