U.S. cellular provider T-Mobile is in hot water with the Federal Trade Commission. Earlier this week, the FTC (News - Alert) announced it had filed a formal complaint against T-Mobile, alleging the cellular company has been cramming bogus charges onto customers’ bills. The FTC alleges T-Mobile (News - Alert) has been making hundreds of millions of dollars by placing charges on bills for “premium” SMS subscriptions the company knew were never authorized by its customers.
The commission claims that T-Mobile received somewhere in the neighborhood of 35 to 40 percent of the total amount charged to customers who were unwittingly signed up for services such as “flirting tips” and horoscope information. These customers were typically charged a fee of $9.99 per month. The FTC claims that there were a number of instances where the company was charging the fee months after the company was made aware of the fact the subscriptions weren’t valid.
"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," FTC Chairwoman Edith Ramirez said in a statement announcing the formal complaint. "The FTC's goal is to ensure that T-Mobile repays all its customers for these crammed charges."
The complaint alleges that T-Mobile’s billing practices made it difficult for consumers to know they were being charged the fees for the subscription services. This in turn made it difficult for customers to cancel those services and so were charged for months and sometimes years. Instead of pointing out the subscription services in particular, T-Mobile disguised the charges as simply “premium services.” What the customers were actually charged for in the premium services could only be found out after clicking through a number of pages.
This is hardly the first time that the FTC has cracked down on scam text services. In June, the commission settled a $10 million case against a number of companies who were offering subscription services like the ones T-Mobile is alleged to have been dealing with.