FTC Sues T-Mobile For Cramming Bogus Charges

(RTTNews) - The Federal Trade Commission said Tuesday that it has filed a complaint against T-Mobile USA, Inc. (TMUS) charging the wireless carrier with making hundreds of millions of dollars by placing charges on mobile phone bills for purported "premium" SMS subscriptions that, in many cases, were bogus charges that were never authorized by its customers.

The FTC alleges that T-Mobile received anywhere from 35% to 40% 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, filed in the U.S. District Court for the Western District of Washington, T-Mobile in some cases continued to bill its customers for those services offered by scammers years after becoming aware of signs that the charges 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," said FTC Chairwoman Edith Ramirez. "The FTC's goal is to ensure that T-Mobile repays all its customers for these crammed charges."

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.

In a process known as "third-party billing," a phone company places charges on a consumer's bill for services offered by another company, often receiving a substantial percentage of the amount charged. When the charges are placed on the bill without the consumer's authorization, it is known as "cramming."

T-Mobile shares closed Tuesday's regular trading session at $33.41, down 21 cents, and lost an additional 26 cents in after hours trading.