The FTC has accused T-Mobile of "knowingly billing customers for hundreds of millions in bogus charges," a practice known as "cramming." That's some next-level unCarrier stuff.
Helmed by John Legere—mobile's best impersonation of a movie hero (or villain?)—T-Mobile has quickly turned into one of the most popular carriers of the Big Four. But it appears with all the front-facing consumer changes, the carrier has been quietly getting along with some nefarious practices, and regulators have taken notice.
If the carrier has indeed been knowingly billing customers for bogus charges, it will surely upset many of the recent converts—and there have been many. How will John Legere explain this, especially when he has been attacking so many other carriers for terrible practices?
According to the report, the FTC is accusing T-Mobile of billing customers for "premium" SMS subscriptions that were never authorized by customers. T-Mobile actually just recently announced a refund program related to premium SMS charges, and said it is committed to rectifying older charges incurred by unwanted SMS services.
"If you've been charged for a third-party service you didn't sign up for, it should be easy to get a refund," said Mike Sievert, CMO for T-Mobile, in June.
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. 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.
Not only does the FTC say T-Mobile knowingly charged its customers, but setup its billing system to purposely make it difficult for customers to detect they were being charged. Apparently when customers would check their bill online, the bill wouldn't show customers they were being charged by a third-party, nor did it show that the extra charge was a recurring subscriptions.
T-Mobile allegedly charged its customers for services that had refund rates of up to 40-percent in a single month, with customer complaints stemming back to 2012. Ouch. Worse, the FTC's complain alleges that T-Mobile would falsely accuse its customers of agreeing to these premium SMS services, but didn't have any evidence to back those claims up. If customers did complain, the report says T-Mobile "in many cases failed to provide consumers with full refunds."
The FTC is seeking to prevent T-Mobile from further cramming its customers, and wants the carrier to provide "refunds for consumers and disgorgement of T-Mobile's ill-gotten gains."
A conference call with media is scheduled for today, July 1, at 2:45 p.m. ET.
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