Feeds

FTC: T-Mobile USA took '$100s of millions' in bogus txt charges

Network CEO blasts Feds' allegations as baseless

Boost IT visibility and business value

T-Mobile US has been accused of hitting customers with bogus text-message charges running into hundreds of millions of dollars.

The Federal Trade Commission (FTC) has filed suit against the carrier, and the Federal Communications Commission (FCC) has opened an investigation. The agencies alleged the company allowed users to be charged for premium text messages without their knowledge or against their will.

According to the FTC complaint, T-Mobile US bagged huge revenues from marketing firms who signed users up to receive premium SMSes and proceeded to charge fees even after users had opted out of the services.

The FTC suit [PDF] claims that between 2009 and 2013, T-Mobile US allowed third-party companies to add monthly charges to bills of which T-Mobile collected a 35 to 40 per cent share. When customers complained or disputed the charges, T-Mobile often ignored or disregarded consumer complaints as it was profiting from the charges, it is claimed.

"We have alleged that T-Mobile took a hefty cut out of these charges," said Jessica Rich, FTC director of consumer protection.

"In aggregate this has translated to hundreds of millions of dollars in revenues for T-Mobile."

Last year, T-Mobile US was among a group of American carriers that vowed to stop charging users premium fees for SMS messages in an effort to crack down on fraud.

According to the FTC, however, the company also needs to refund users the revenues it made from allowing so-called cramming practices to operate on its network before the new anti-premium SMS policy was put in place. The lawsuit calls for the carrier to provide customers with refunds, while T-Mobile US could face further fines should the FCC decide to pursue its own case.

"We will determine in court just how much [money was collected], and how much of that is due to customers," Rich said. She added that before filing its lawsuit, the FTC had tried to negotiate a settlement with the carrier.

Meanwhile, T-Mobile US moved quickly to condemn the suit as "unfounded and without merit." In a statement released Tuesday afternoon, CEO John Legere placed blame on the marketing companies.

"Unfortunately, not all of these third-party providers acted responsibly— an issue the entire industry faced," Legere wrote.

"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." ®

Secure remote control for conventional and virtual desktops

More from The Register

next story
UK fuzz want PINCODES on ALL mobile phones
Met Police calls for mandatory passwords on all new mobes
Don't call it throttling: Ericsson 'priority' tech gives users their own slice of spectrum
Actually it's a nifty trick - at least you'll pay for what you get
Three floats Jolla in Hong Kong: Says Sailfish is '3rd option'
Network throws hat into ring with Linux-powered handsets
Netflix swallows yet another bitter pill, inks peering deal with TWC
Net neutrality crusader once again pays up for priority access
Fifteen zero days found in hacker router comp romp
Four routers rooted in SOHOpelessly Broken challenge
New Sprint CEO says he will lower axe on staff – but prices come first
'Very disruptive' new rates to be revealed next week
US TV stations bowl sueball directly at FCC's spectrum mega-sale
Broadcasters upset about coverage and cost as they shift up and down the dials
Tech city types developing 'Google Glass for the blind' app
An app and service where other people 'see' for you
Canadian ISP Shaw falls over with 'routing' sickness
How sure are you of cloud computing now?
UK mobile coverage is BETTER than EVER, networks tell Ofcom
Regulator swallows this line and parrots it back out at us. What are they playing at?
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Top 10 endpoint backup mistakes
Avoid the ten endpoint backup mistakes to ensure that your critical corporate data is protected and end user productivity is improved.
Top 8 considerations to enable and simplify mobility
In this whitepaper learn how to successfully add mobile capabilities simply and cost effectively.
Rethinking backup and recovery in the modern data center
Combining intelligence, operational analytics, and automation to enable efficient, data-driven IT organizations using the HP ABR approach.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.