FTC: T-Mobile Bilked Customers for Hundreds of Millions of Dollars

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John Legere, CEO of T-Mobile US, Inc. speaks at T-Mobile's Un-carrier 4.0 press event on Wednesday, Jan. 8, 2014 in Las Vegas.

Image: Jeff Bottar/Associated Press

By Todd Wasserman2014-07-01 18:49:15 UTC

The Federal Trade Commission on Tuesday accused T-Mobile USA with bilking customers out of hundreds of millions of dollars with bogus SMS charges.

The FTC claims T-Mobile received 35% to 40% of the total amount third-party scammers charged to consumers for content like celebrity gossip, flirting tips and horoscopes that cost $9.99 a month typically. In some cases, T-Mobile continued to charge customers for the services after becoming aware that they were fraudulent and offered by scammers.

"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."

The extra charges were made possible by third-party billing, in which a carrier places a third party's services on a customer's bill and then gets a cut of the subscription. The practice is known as "cramming."

The agency states that it believes that T-Mobile should have been aware of the issue since so many users complained. The complaints started around early 2012. The FTC's complaint argues that T-Mobile made it difficult for consumers to realize they were being charged extra since the third-party services were listed under the heading "Premium Charges" and a sub-head, "Use Charges." Neither displayed the third-party fees.

T-Mobile reps could not immediately be reached for comment.

Topics: Business, FTC, T-Mobile