FTC: T-Mobile knowingly bilked customers for millions with bogus charges
| WASHINGTON
T-Mobile听USA knowingly made hundreds of millions of dollars off its customers in potentially bogus charges, a U.S. government regulator alleged Tuesday in a complaint likely to mar the reputation of a household name in wireless communications.
In its complaint filed in a federal court in Seattle, the Federal Trade Commission claimed that听T-Mobile听billed consumers for subscriptions to premium text services such as $10-per-month horoscopes that were never authorized by the account holder. The听FTC听alleges that听T-Mobile听collected as much as 40 percent of the charges, even after being alerted by other customers that the subscriptions were scams.
"It's wrong for a company like听T-Mobile听to profit from scams against its customers when there were clear warning signs the charges it was imposing were fraudulent," said听FTC听Chair Edith Ramirez in a statement. "The听FTC's听goal is to ensure that听T-Mobile听repays all its customers for these crammed charges."
The Federal Communications Commission has launched a separate inquiry into T-Mobile's billing practices, which could result in fines if it finds any wrongdoing.
The practice is often referred to as "cramming": businesses stuff a customer's bill with bogus charges associated with a third party. In this case, the听FTC听says听T-Mobile听should have realized that many of these premium text services were scams because of the high rate of customer complaints. In some cases, the听FTC听says, as many as 40 percent of customers demanded refunds in a single month on certain services.
The听FTC听said one way for consumers to try to prevent fraudulent charges is to ask their providers to block all third-party businesses from providing services on their phones.
T-Mobile听did not immediately respond to a request for comment.听T-Mobile听US, Inc., is a publicly traded company. According to its website, Deutsche Telekom AG maintains a 67 percent ownership in the company's common stock.
Sprint Corp., the third-largest cellphone carrier, is in talks to buy听T-Mobile听US Inc., according to published reports. Analysts believe such a link-up would face stiff opposition from the same regulators who blocked AT&T from buying听T-Mobile听in 2011.
T-Mobile's stock fell 10 cents to $33.52 in afternoon trading.
