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-Mobile's Reponse (Score:5, Informative)
For those not clicking links, this is what T-Mobile had to say about this:
We have seen the complaint filed today by the FTC and find it to be unfounded and without merit. In fact 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. T-Mobile is fighting harder than any of the carriers to change the way the wireless industry operates and we are disappointed that the FTC has chosen to file this action against the most pro-consumer company in the industry rather than the real bad actors.
As the Un-carrier, we believe that customers should only pay for what they want and what they sign up for. We exited this business late last year, and announced an aggressive program to take care of customers and we are disappointed that the FTC has instead chosen to file this sensationalized legal action. We are the first to take action for the consumer and I am calling for the entire industry to do the same.
This is about doing what is right for consumers and we put in place procedures to protect our customers from unauthorized charges. Unfortunately, not all of these third party providers acted responsibly—an issue the entire industry faced. We believe those providers should be held accountable, and the FTC’s lawsuit seeking to hold T-Mobile responsible for their acts is not only factually and legally unfounded, but also misdirected.
-- John Legere, CEO of T-Mobile USA
Re:T-Mobile's Reponse (Score:5, Informative)
Given the FTC complaint, if the statements made there are true T-mobile's going to be paying a lot of money this year: The FTC claims they made it impossible for the customer to detect the fraud in the first place, ignored all warning signs from those that managed to detect it anyway, then did not provide full refunds in all cases but partial at best, none at worst - and told those customers to deal with the scammers themselves while failing to provide the contact details they had.
If these things can be proven (should be pretty easy, the accusations are highly specific), T-mobile is looking at a pretty hefty class action suit.
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Bills that can be dynamic in nature should not be set up on autopay with no notifications.
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There's also no indication that other carriers are immune from this problem; and unlike t-mobile, other carriers are still collecting these charges.
Re:T-Mobile's Reponse (Score:5, Insightful)
Astroturf is on sale this week at Home Depot.
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All I can say is that ion my case, they refunded my money quickly and easily.
Re:T-Mobile's Reponse (Score:5, Insightful)
I'm going to go ahead and surmise that other carriers are behind this attack. What else explains the FTC not going after AT&T and Verizon for equally bad and worse stuff? T-Mobile has explicitly halted this practice.
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I'm not sure how it is you feel that other carriers handled better for you the cases of other customers being ripped off that is accused by the government.
It is almost as if you're too old to know what an individual is, or that you are one. Or that you not being robbed tells you nothing about who robbed somebody else.
"Your honor, that man is innocent, why I was alive at the same moment as the victim, and that man didn't rob me."
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I feel like I'm being a little paranoid, but I had the same thought. And after all the NSA revelations and whatnot, I feel like paranoia is justified.
It's an industry that has always tacked on weird semi-fraudulent charges to your bill. The industry has always tried to hide what you're actually being charged for, advertised different prices than what you're actually charged, charged you for add-on services without consent, and charged for unexpected overages without warning. Meanwhile, T-Mobile has been
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Listening to this piece on NPR today I was reminded of the 90's, and all the crazy abusive things phone companies did then. Before cellular really hit it big, long-distance calling was contracted separately from but billed through your local phone company. There was a huge competition between long-distance companies. They would not only call you constantly trying to get you to switch, but nefarious activities were common. Once a year at least I'd open up my phone bill and discover I'd been switched to a new
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Welcome to the unintended consequences of the breakup of Ma Bell. :(
I remember when your local and long-distance were ALL Ma Bell (barring the small local co-ops) and even party lines and 5-digit phone numbers. Now get off my lawn!!
Re:T-Mobile's Reponse (Score:5, Informative)
I have to say, my experience with these bogus charges supports t-mobiles claims. About 3-4 years back, my wife somehow got signed up for some bogus service that was charging $10 per month. I didn't notice it until the 3rd bill. I called up t-mobile and they refunded the entire amount with no hassle. Furthermore, since my wife never uses any of those subscription services at all, they even offered to put a block on her account so she couldn't be re-subscribed.
That was years ago, and we haven't had any more problems. I had even forgotten all about it, but a few weeks ago I found out that block is still in place. We tried to sign up for a free text message subscription with Target so that we could get a $5 coupon they were offering. Tmobile automatically rejected our signup attempt, indicating that the service is blocked.
That said, I do have to nitpick one thing in t-mobile's statement:
In fact T-Mobile...launched a proactive program to provide full refunds for any customer that feels that they were charged for something they did not want
That sounds more reactive than proactive.
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Here in Austria, t_mobile is not that angel it's made out to be. Stuff like them trying to charge me for some SIM card related service, although my bill clearly has some SIM card service charge (which everyone on a contract gets to pay).
For me, T-Mobile acts a lot like "lets just rip em off, and the few people that actually control their bills (and complain) get refunded, some explanation about errors in the system and flagged for "no more rip offs". Bonus: these people will market our "sincerity" for us.
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So your experience is that of the 1 time t-mobile helped a company rip you off, they refunded the charges, therefore the percent of customers who didn't get a refund must be different than accused by the government.
I really can't see how that would follow. Your experience validates half the accusation, and they're not accused of never refunding anybody, only of not refunding a bunch of specific people... who really didn't get refunds.
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So your experience is that of the 1 time t-mobile helped a company rip you off, they refunded the charges, therefore the percent of customers who didn't get a refund must be different than accused by the government.
I really can't see how that would follow. Your experience validates half the accusation, and they're not accused of never refunding anybody, only of not refunding a bunch of specific people... who really didn't get refunds.
You need to work on your reading comprehension. Did I say any of the stuff you seem to be suggesting I did? No, I only said "my experience with these bogus charges supports t-mobiles claims". That's just me providing my data point. Others in this discussion will do the same. When we have a bunch of them, we can read them all and draw our own conclusions as to whether we believe the accusations are accurate or not.
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It is actually truly funny that accuse me of not comprehending you. It is almost as if you didn't comprehend me! I understood you, now keep parsing until you understand me. ROFLCOPTER
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I had almost exactly the same experience as you did: $10 charges showed up on my t-mobile bill from some random bogus premium service. I called them up, they refunded me, and offered to put a block on those types of premium services on my account, which I accepted. Problem solved for me, but I feel bad for anyone who doesn't or didn't review their mobile phone bills. I would imagine that other carriers are subject to the same "premium" text service scams, by the way.
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For those not clicking links, this is what T-Mobile had to say about this:
Blah blah blah, unfounded allegations, blah blah blah, customer first, blah blah blah, we're totally innocent, blah blah blah release the lawyers, blah blah blah, join our network.
-- John Legere, CEO of T-Mobile USA
So... (Score:4, Insightful)
Any word on who actually directed, authorized, permitted, etc. this little plan, and why they aren't facing a raft of fraud charges?
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I guess a whooosh is in order.
Deja vu (Score:1)
This similar to the case of Google profiting from illegal ads. Personally I think the complaint should be sent to questionable subscription service rather than shoot the messenger.
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This similar to the case of Google profiting from illegal ads. Personally I think the complaint should be sent to questionable subscription service rather than shoot the messenger.
When the 'messenger' is the one who hides the charge and collects the proceeds of the fraud(taking a cut), you bloody well should shoot him. Then shoot whoever he was working with, of course; but no need to choose.
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Except I find it hard to believe T-Mobile hid anything.
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.
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.
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You know, they don't care? Like the insurance companies, credit card companies, etc, their scam is perfect. They just write off the loss and charge their other customers more...
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Writing off a loss generally doesn't do much for you. It might save you 30% of the charge or so.
Insurance companies have a better deal because their business often involves re-insurance, that is off-loading their liabilities to pools.
The best of all is credit cards. They charge fees to merchants to cover the losses. The merchants then bake the fees into the retail price which people pay regardless of whether or not they use the card.
So no, T-Mobile isn't quite in the same league as insurance and credit card
it's wrong... (Score:5, Funny)
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."
T-Mobile replied "It's wrong for the FCC to call us fraudulent, twice."
Huh, I had that problem with AT&T... (Score:2)
But never with T-mobile. AT&T did indeed allow third parties to start charging us without permission, then made it a fair amount of hassle (from my point of view, anyway) to cancel the services which we never requested. Never had a problem on any of our t-mobile lines.
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I've had ATT charge me for data services on a phone which had no data capabilities.
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If this flys... (Score:1)
Can we sue every ISP on the earth for allowing SPAM thru? Be it email, video ads, etc..
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Only if they also charge you and additional fee specifically for the privilege of receiving it.
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It comes off my monthly bandwidth cap.
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Hence "specifically" -- technically, you requested those things (or your browser or e-mail client did). You can get headers for e-mail (you'll still get some lossage there, but there's not a lot they can do outside of the filters already in place). All the ads you requested and they delivered. Maybe indirectly (clicking on the link to the ad-riddled site), but there's nothing on their end that they can do to know what traffic you want intentionally, and what you don't actually want but still sent a reque
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About time. (Score:3, Informative)
T-Mobile did this to me a few years ago and never reversed the charges (claiming I had to go to the slamming company for a refund, which I did but unsurprisingly I never got the promised refund). They claimed I must have confirmed it via SMS but I pointed out my account has SMS disabled so there was no way for me to receive nor confirm I wanted it. They didn't really care. Given that I find the rebuttal to be disingenuous.
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Aren't all SMS charges pretty much bogus? (Score:4, Insightful)
These are outrageous, but even at 20 cents a text, it's gouging IMO.
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These are outrageous, but even at 20 cents a text, it's gouging IMO.
you know SMS is completely and totally free for the carrier right? So it's even more of a scam than you think. The only reason they're not charging as much now is because there are so many IP text apps out there now. You're an idiot if you're paying for them at all.
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Relatedly, T-Mobile US doesn't charge for texts at all. None of their plans in the last year or so *don't* including unlimited SMS/MMS, and lot of their earlier ones had unlimited messages too.
TMo also shows the breakdown in your monthly bill very clearly, including showing how each item (and the total) has changed in cost from one month to the next. So for example, when I added a new line to my plan, it was immediately and extremely obvious how much that cost me, and why. There's no way they could slip in
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The problem is, quite simply, that people don't read their bills.
If only people would read the contracts they sign and the bills they get:
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I realize you make a joke here, but you have it 100% right. In the US, I consider it reasonably safe to say that 90% of the people this affects had a monthly contract (yes, I know T-Mobile offers reasonable contractless plans, but unlike the other big carriers, their contracts don't keep penalize you once their phone-subsidizing portion finishes). That means 90% of
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Relatedly, T-Mobile US doesn't charge for texts at all. None of their plans in the last year or so *don't* including unlimited SMS/MMS, and lot of their earlier ones had unlimited messages too.
That's only true for domestic SMS. You can't even send or receive a single SMS internationally without paying a $10 monthly fee first. After that, whether you have to pay extra per message too depends on the country.
True, you might not have no friends or other contacts elsewhere in the world, but that's certainly not the case for me.
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I have friends or family on at least four different continents at any given time, and my parents are currently somewhere in Indonesia (I'm in the continental US). We keep in tough all the time... by email, IM, Skype, Google Voice numbers, and other zero-cost options. The last time I had to send an actual SMS to an international number was while I was in Finland and meeting a friend at the train station, and the cost was minimal. There was no $10 initial fee, either. Maybe that only applies if you're not alr
Re: Aren't all SMS charges pretty much bogus? (Score:2)
The air interface may be "free" in a marginal-cost sense. SMSCs (and the associated charging solutions in the case of real-time billing systems) aren't, and companies like Acision [acision.com] make their fortunes selling these.
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SMS is a service they provide you, they can charge what they want for that service - and you can choose whether or not to use that service.
And Then Some (Score:5, Informative)
I was informed more than once that the companies have to accept third party billing charges. IMHO, what they don't have to do is hide the charges on the back of page four of the bill.
Read your monthly charge summaries carefully. If you catch a sham billing they will quickly remove it, but they will usually only go back a month or two. It's remarkably easy to miss a bogus four or five dollar monthly charge.
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My T-Mobile bill has a place specifically for addition charges. East to find.
I think those crafty Devils call it:Addition charges.
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There's hope for you yet.
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According to the screenshots including in the court filing (the linked PDF in the summary) people with online bills had to click "Use charges" twice before getting any itemized list, and that list was still bundled with other t-mobile charges, so even then you would never see a list of the 3rd party charges with a total. And on that 3rd screen they are just "Premium services."
Also in the accusations is that prepaid customers were charged these $9.99/month amounts without ever being billed or notified.
And:
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I've always suspected that the telcos took a huge cut of third party billing. Which of course is why they make it possible, don't call attention to it in billing and play the ignoramus when it comes to the basically fraudulent nature of the whole situation.
The cell carriers are better about removing the charges and refunding multiple months of charges (well, at least 2-3) as well as being able to block them. Qwest was always terrible on our commercial accounts about refunding crammed charges and claimed th
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On the flip side, it seems so lucrative and low risk I wonder how I could get in on the action.
I, too, am cursed with the memory of a younger, less risk-aversion, version of myself.
I largely suspect that is why i simultaneously find interest in, and see right through, these rather thinly guised versions of deceit.
TMO fight for the consumers! (Score:2)
I have an answer that will make everyone happy. (Score:2)
T-mobile refunds the last 2 years of cellphone service to all customers past and present.
That would be fair and just.
Crystal ball... (Score:5, Insightful)
If I look into the future I see a press release about a year from now:
"In a clear victory for consumers, the FTC has levied a fine of $20 million against T-Mobile in response to fraudulent SMS charges. The largest fine (related to fraudulent SMS charges on a tuesday, during a leap year) ever."
then another year out
"T-modile announced that a former FTC director will now work as CEO of Regulatory affairs. T-Mobile released a statement saying that they are pleased to be working with someone with so many years working in government. The FTC director said in a statement "I really like me new boat!"
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If you read the complaint, in addition to returning money they're also seeking force the alteration of the contracts to prevent the behavior in the future, and a broad injunction from further violations.
Knowing that the fine won't mean much doesn't tell you anything about the effort to stop the behavior.
Disappointing (Score:2)
If true, that leaves me a bit disappointed. I switched to their pay-as-you-go plan in October and have been happy enough with it: while their cell service is pretty crap compared to Verizon, they also didn't do anything super-evil like Verizon (that I was aware of)... until now. Even if true, I still prefer them over any of the other three major providers, so I don't plan on switching to anything else.
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According to the allegations, pre-paid customers aren't notified at all, the money just disappears from the account and no refunds are possible.
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According to the allegations, pre-paid customers aren't notified at all, the money just disappears from the account and no refunds are possible.
From my other post (to which you already replied and tried to put words into my mouth), I received a refund on my account. I didn't mention it there, but that was a prepaid account. So it clearly is POSSIBLE to get a refund, and they gave me no hassle over the matter.
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Are you claiming to have also received the refunds that they're accused of not giving to other people, or does your example simply not touch on the accused behavior at all?
"Your honor, I was in the same city at the same, and nobody was robbing me. So nobody could have been getting robbed by the accused!"
Do you really not understand the difference between being the person they're accused of ripping off, and being one of the other customers that wasn't ripped off? There is nothing in the accusations claiming
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Nope sorry, you aren't comprehending again. You said "no refunds are possible", but yet I got a refund, so it is at least POSSIBLE (and again, I make no claims about other peolpe's experiences, just my own).
And yes, I am a PREPAID customer, not their new month-to-month program. I've been a PREPAID customer since about 2005 (give or take a year), which is long before their current plans existed. I pay $100 (slightly less online, actually) to get 1000 minutes that are good for 1 year. That is their PREPAID pr
Already obsolete (Score:5, Informative)
The FTC is infamous for bring suit even years after the transgressions occurred.
Typical. Not much to see here.
Indeed, from the Complaint:
"Until at least December 2013, T-Mobile has also charged consumers for other services..."
"Until at least December 2013, in addition to charging for phone services offered
by Defendant, Defendant has charged many consumers for other services offered by third-party
merchants. These purported services have included monthly subscriptions for content such as
ringtones, wallpaper, and text messages providing horoscopes, flirting tips, celebrity gossip, and
other similar information (“Third-Party Subscriptions”). Defendant typically has charged
consumers $9.99 per month for such Third-Party Subscriptions. "
No doubt.
"9. In numerous instances, Defendant has charged consumers for Third-Party
Subscriptions that the consumers did not order or authorize, a practice known as cramming.
Defendant has continued to charge consumers for Third-Party Subscriptions even after large
numbers of consumers complained about unauthorized charges. Refund rates for the
subscriptions were high – in some cases as high as 40%. Further, Defendant has continued to
charge consumers for Third-Party Subscriptions even after industry auditor alerts, law
enforcement and other legal actions, and news articles indicated that the third-party merchants
were not obtaining valid authorization from consumers for the charges. "
FTC boilerplate for these sorts of complaints. Every carrier has done this, some repeatedly, over the past few decades.
"11. In television and other advertisements, and during its sales process, Defendant
markets its telephone and data services to consumers. Defendant’s sales representatives often
discuss these services only, and not purported third-party services, with consumers. Defendant’s
contracts make clear and prominent representations about the services it provides; information
about third-party services is buried in lengthy terms and conditions of its service contract.
12. Defendant has not obtained authorization from consumers before charging them
for Third-Party Subscriptions. Instead, the third-party merchants or billing intermediaries
purportedly have obtained authorization. In many cases, however, these third parties have failed
to obtain authorization from consumers."
And indeed, same old boilerplate. Especially the phrase "buried in lengthy terms and conditions of its service contract"
If the FTC would similarly file complaints against any number of corporations that do just this, they would be very very busy indeed.
This is PR for the FTC. You go, boyz!
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.
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What back peddle? That have a spot on their bills specifically for additional services. IT's been there as long as I can remember and I've been with T-Mobile for over a decade.
Maybe this court case will get so every cell provider no longer HAS to take these charges.
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If you read the PDF you'll find screenshots of the bills right in the complaint, and they refute your astroturf.
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Seriously? They're back peddling because I've had t-mobile and it was a PITA to get rid of those charges and to block them from happening again. At the time I could get them removed from future billing statements. Their position was once I was billed I had to pay them because they were used. I had to argue the point that a 14 year old inadvertently used the feature, that I didn't authorize. Once I did that the charges miraculously disappeared. I'm glad the FTC is calling them out on this but it's a
As a T-Mobile customer... (Score:1)
They have the best customer support in the biz hands down. This smells funny...
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Legal problems (Score:2)
For years politicians chiseled away at regulations and lending requirements in the name of increasing home ownership and making bankers happy while leveraging "meltdown" as cover to escape any responsibility for the environment they helped create.
Likewise telephone billing problems were created by politicians thru legal requirements mandating passing charges on to customers by default. If the law was opt-in vs opt-out none of this shit would be happening.
In the real world you can't create this kind of perm
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I think you're overlooking profit motives.
With home loans, the lenders found a way to sell worthless mortgages, so suddenly they had a financial incentive to issue as many mortgages as possible, including worthless ones. With telephone billing, the carrier gets a cut of money collected, so there's a financial incentive to allow and pass on charges.
US Mobile plans are f'd. (Score:3)
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Was it 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?