T-Mobile USA accused of adding charges to mobile phone bills for premium SMS subscriptions

The US Federal Trade Commission (FTC) is charging mobile phone service provider T-Mobile USA with making hundreds of millions of dollars by placing false costs onto customer phone bills for supposed premium services.

In a complaint filed today, T-Mobile USA has been accused of adding charges to mobile phone bills for SMS subscriptions that, in many cases, were false charges that were never authorised by the operator’s customers.

The third party billing charges were added to consumer account monthly bills by T-Mobile USA on behalf of other providers. The phone company would have received a significant amount of each third party charge as recompense for this service, which when carried out without customer consent is known as ‘cramming’.

The FTC claims that T-Mobile USA took between 35% and 40% of the total amount charged to customers for the services, which included services such as flirting tips and celebrity gossip by SMS, typically costing $9.99 per month. 

According to the FTC’s complaint, in some cases T-Mobile continued to bill customers for these services years after becoming aware that the charges were fraudulent.

The FTC’s complaint states that in certain cases, the mobile operator was continuing to charge customers even though specific services saw customers demanding their money back at a rate of 40% per month. The FTC says that these high refund rates should have been seen as a warning flag by T-Mobile that the services were not authorised by customers. 

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

The complaint notes that the refund rates are likely to be significantly lower than the actual number of customers who were being crammed, and that T-Mobile was receiving high levels of customer complaints about this practice since 2012.

Additionally, the complaint against T-Mobile says the company’s billing practices made it difficult for consumers to detect that they were being charged, and even harder to see who they were being charged by as individual charges were not listed.

Over the last 12 months the FTC has filed several lawsuits against alleged mobile cramming operations Jesta Digital, Wise Media, and Tatto Inc. According to today’s complaint, T-Mobile billed its customers for the services of these FTC defendants as well as an operation sued by the Texas Attorney General.

The FTC’s complaint seeks a court order to permanently prevent T-Mobile from engaging in mobile cramming and to obtain refunds for consumers and disgorgement of T-Mobile’s ill-gotten gains.