T-Mobile is the target of a new lawsuit by the Federal Trade Commission. According to the FTC, T-Mobile repeatedly charged large numbers of users for third-party services which they did not authorize, making millions of dollars in the process.
The services in question usually cost $9.99 per month, and T-Mobile received up to 40 percent of the revenue. The company accepted the word of third parties that customers had authorized the payments without ensuring that the customers had actually done so, states the FTC.
In addition, the charges were buried deep in the customers' bills, claims the agency. Looking at the bill online, the charge is hidden under the "Uuse charges" category, and even when that is expanded the charge is described only as "premium services." In a paper bill, the charge is again listed as "premium services" and is grouped under "usage charges" in the bill summary. Information what those premium services actually are cannot be found until the middle or end of the bill, which can sometimes be up to 50 pages long. Cancelling the premium services is not presented as an option.
"The 'Usage Charges' line item in the summary is included in the 'Total Current Charges' and 'Grand Total' that Defendant represents are 'due by' a specific date. Many consumers believe they are obligated to pay Defendant for all charges appearing on their phone bills," says the FTC in its complaint [pdf].
For prepaid customers the situation was even more disguised. Those customers do not receive monthly bills, and the service charge was deducted from their remaining minutes without notification. T-Mobile began receiving an increased number of complaints about surreptitious charges in early 2012, but the problem continued until at least December 2013. In some cases the company offered refunds to customers who complained about the charges, in some cases it did not. Even when refunds for some services reached as much as 40% of the total number of customers charged, T-Mobile did not investigate.
The FTC also claims T-Mobile continued to charge for these third-party services despite alerts from industry auditors and law enforcement, as well as news articles discussing the fact that these third parties were not obtaining authorization from customers.
However, T-Mobile CEO John Legere says that the accusations of the FTC are "unfounded and without merit."
"In fact T-Mobile stopped billing for these Premium SMS services last year and launched a proactive program to provide full refunds for any customer that feels that they were charged for something they did not want," says Legere in a statement.
"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."