FTC broadsides T-Mobile over "bogus charges"

US watchdog the Federal Trade Commission slammed T-Mobile USA on Tuesday, alleging that the carrier made “hundreds of millions of dollars” from bogus premium SMS charges never authorised by subscribers.

The FTC alleges that T-Mobile received anywhere from 35 to 40 per cent of the total amount mis-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, in a process known as “third-party billing,” a phone company places charges on a consumer’s bill for services offered by another company and receives a percentage of the amount charged. When the charges are placed on the bill without the consumer’s consent, as the FTC claims in this case, it is known as “cramming.”

The complaint alleges that in some cases, T-Mobile was charging consumers for services that had refund rates of up to 40 per cent in a single month and because such a large number of people were seeking refunds, Ramirez believes it “was an obvious sign to T-Mobile that the charges were never authorized by its customers.

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

Not letting up, the FTC also criticised T-Mobile billing ability for obfuscating the charges and the customer services teams for failing to deliver full refunds in some cases.

Naturally, T-Mobile USA’s outspoken CEO, John Legere, took to Twitter to counter the claims, calling the allegations “unfounded and without merit.”

Legere claims T-Mobile stopped billing for these premium SMS services in 2013 and launched a proactive program to provide full refunds for any customer that feels that they were charged for something they did not want.

“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,” he said.