While the Federal Trade Commission has brought a fair share of suits against phone companies who cheat their customers, their latest suit against T-Mobile will be their the largest “cramming” case laid out by federal authorities. “Cramming” is a deceptive practice phone companies use to hide costs and charges from customers. In T-Mobile’s case, this sort of thing has allegedly being going on from 2009 to the end of 2013.
In this case of “cramming,” T-Mobile is accused of making hundreds of millions on false charges. Third-parties for such services as flirting tips, horoscopes, and celebrity gossip, charging $9.99 a month, have been billed to customers who not only didn’t know they were being billed, but perhaps had nothing whatsoever to do with the third parties. In some instances, the third parties are said to have bought the phone numbers that were later billed, with no involvement from the customers at all.
Not only is the FTC on board with this, but so is the Federal Communications Commission, which together compose the main regulators of telecommunications industry, and furthermore, gives the added clout that the FCC can impose fines, something the FTC could not do on its own.
“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, as reported by The New York Times. “The FTC’s goal is t ensure that T-Mobile repays all its customers for these crammed charges.”
Indeed, T-Mobile has paid back 40 percent of those who complained of these charges, “an obvious sign to T-Mobile that the charges were never authorized by its customers,” the FTC claimed.
As part of damage control the new CEO John Legere, who came on after such practices were allegedly in place, but who also did not stop them, claimed the FTC’s complaint was “unfounded and without merit. In fact, T-Mobile stopped billing for these Premium SMS services last year and launched a proactive program to provide full refunds for any customer that feels that they were charged for something they did not want.”
Responding only to customers who “feel” they were charged for something they do not want implies also that the customer was aware. Nevertheless, prepaid customers don’t receive any bill whatsoever, and for the rest, the bills are difficult to negotiate, often 12 pages long and with no clear indication of what is going on and where the charges are coming from.
Legere kept his rhetoric sailing, nevertheless, saying, “T-Mobile is fighting harder than any of the carriers to change the way the wireless industry operates, and we are disappointed that the FTC has chosen to file this action against the most pro-customer company in the industry rather than the real bad actors.”
As to why the FTC dared harass such a “pro-customer company,” we should at least point out that this sort of thing is why the FTC exists in the first place, and it has meanwhile been successful in such pursuits. Further, given that the FCC is involved, and T-Mobile will need their approval to execute their proposed merger with Sprint, a 50 billion dollar deal, T-Mobile is in a compromised position.
That they tout themselves as the “un-carrier” something marvelous and different from the other carriers because their billing is simple, straightforward, and without contract, makes such charges especially vexing, and will set them to resist easy settlements, as they so far have indicated, and back them against the wall for a stark fight.