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T-Mobile has had a few great months, experiencing substantial subscriber growth and favorable financial results. But the honeymoon appears to be over after the Federal Trade Commission (FTC) filed a hefty lawsuit accusing the company of ignoring customers’ complaints about bogus charges on their bills.
According to the FTC, T-Mobile ignored cramming – where scammers fraudulently place unauthorized charges on a user’s monthly phone bill via their service provider – and subsequently gave the cold shoulder those who complained, waiving only a portion of the fee for some and continuing to bill others. Those charges were for “premium” SMS subscriptions to services offering horoscope information, celebrity gossip or flirting tips.
The suit alleges T-Mobile pocketed 35 to 40 percent of revenues from those charges amounting to hundreds of millions of dollars. Its billing practices made it difficult for customers to identify the bogus charges, which were listed in abbreviated form such as 8888906150BrnStorm23918. Prepaid customers do not receive bills and had the charges automatically withdrawn from their accounts without even realizing it.
“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, in a statement. “The FTC’s goal is to ensure that T-Mobile repays all its customers for these crammed charges.”
However, T-Mobile – whose controversial CEO John Legere is quick to attack other carriers for screwing over customers – has vociferously denied the claims, which it said were “unfounded and without merit.” It says it ceased billing customers for such services last year, and introduced a program that provides a full refund to any users who is charged for services to which they did not subscribe.
“This is about doing what is right for consumers and we put in place procedures to protect our customers from unauthorized charges,” said Legere, in a statement on the T-Mobile website. “Unfortunately, not all of these third party providers acted responsibly—an issue the entire industry faced. We believe those providers should be held accountable, and the FTC’s lawsuit seeking to hold T-Mobile responsible for their acts is not only factually and legally unfounded, but also misdirected.”
The Federal Communications Commission has also launched its own investigation.
*Source: Federal Trade Commission