T-Mobile US preps for $43 MEEELLION shower of gold on cram victims
Network braces for quarterly hit from repaying unwanted SMS charges
As American regulators at the FTC crack down on mobile bill "cramming" scams, T-Mobile US has ring-fenced at least $43 million – to refund customers who were fraudulently charged for premium SMS services.
The network said in its quarterly earnings report that the expected payouts were among the non-recurring factors it listed for service revenues over the three months ending June 30.
T-Mobile US stopped offering premium SMS services in 2013. Since then, the company has operated a refund program which allows users to seek out payments for unwanted or deceptive premium services they may have been billed for.
The refund charges were part of an otherwise strong quarter for T-Mobile US. The company added 1.5 million new customers on the quarter, and $7.2bn in revenues, up 15 per cent over the same period last year. Adjusted EBITDA stood at $1.45bn, up 14.7 per cent year on year. The network today has 50.5m customers on its books.
Known as "cramming," the practice of tricking users into signing up for premium messaging services can be a highly lucrative business for fraudsters. Often disguising subscription services behind the promise of free stuff or special offers, unscrupulous companies can sign users up for horoscope text message subscriptions and the like, which are then added to the user's monthly mobile bill.
If the customer does not closely read their statements, it can result in hundreds of dollars being paid out over the length of the subscription.
The FTC in particular has been aggressively pursuing the companies running cramming scams while also admonishing the carriers that benefit by taking a cut of the revenues. Earlier this year the FTC alleged that T-Mobile US made "hundreds of millions of dollars" by enabling cramming schemes.
The company has denied the FTC's allegations, saying that the commission overstated the revenues collected from the premium SMS services. T-Mob US CEO John Legere has suggested that company was being singled out at the behest of lobbyists representing competing carriers. ®