How T-Mobile Added Millions in Bogus Charges to Cell Phone Bills

By Brian Slupski

The Federal Trade Commission alleges that T-Mobile USA added hundreds of millions of dollars in charges to cell phone bills for purported "premium" services that customers never authorized.

The complaint filed by the FTC states that  $9.99 was added to people's cell phone bills for premium SMS subscriptions for things such as flirting tips, horoscope information or celebrity gossip. T-Mobile would get between 35 and 40 percent of the added third-party charges.

The FTC alleges that in some cases T-Mobile continued to bill people for years even after becoming aware that the charges were fraudulent.

“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. “The FTC’s goal is to ensure that T-Mobile repays all its customers for these crammed charges.”

"Cramming" is a practice of placing a third-party charge on a person's bill without the customer authorizing it.

Previous FTC complaints outlined how charges would end up on cell phone bills. The FTC has taken action against companies such as Tatto, Inc., Jesta Digital and Wise Media. T-Mobile was billing customers for the services of some of these and other companies.

In the FTC case against Jesta the company settled agreeing to pay consumers a refund and pay $1.2 million to the FTC.

Jesta would use ads telling consumers a virus was detected on a person's mobile phone. The FTC stated that if the ads were clicked on people were sent to a series of screens that included language about protecting Android devices. The screen contained a subscriber button, but if a person clicked anywhere on the screen they were signed up for a $9.99 monthly charge on their mobile phone bill for ringtones and other content.

The FTC complaint against T-Mobile states that the company had refund rates of 40 percent some months for various services. The FTC states that T-Mobile should have known that many of the charges were not authorized by customers because of the high number of complaints.

"The refund rate likely understates the number of consumers who have been crammed," the complaint states. "Only those consumers who successfully identify the unauthorized charge can even attempt to dispute it."

The FTC complaint points out that T-Mobile did not show consumers that they were paying a third-party charge on bill after bill. Instead, the charge was listed as "Usage Charges." The FTC states that the crammed items were itemized under "Premium Services." A partial sample bill attached to this post shows the Usage Charges on page one with the itemization on page 123.

And the itemization usually still masked what the charge was for with abbreviations such as “8888906150BrnStorm23918.”

In some instances, T-Mobile did not provide a refund to customers even after becoming aware that they were being charged for services they had not ordered. T-Mobile told some customers to seek refunds from the scammers, the FTC complaint states, without providing accurate information for the customers to do so.

In other cases T-Mobile claimed customers had ordered the services when the company had no proof to back up the assertion.

The complaint asks that a federal court enter an injunction against T-Mobile to "prevent future violations of the FTC Act." The complaint also asks that consumers receive refunds related to the charges.