Did T-Mobile ‘Cram’ Customers? FTC Wants To Know

Those puzzling, voluminous lines of charges on cell phone bills might soon cost a carrier instead of the consumer. The U.S. Federal Trade Commission Tuesday filed a lawsuit alleging that T-Mobile has padded its profits in recent years with charges concealed on its bills and not ordered by its customers. It's an illegal billing practice known as cramming and the FTC is not amused.

In a civil complaint filed in federal court in Seattle, the FTC alleges that T-Mobile charged consumers monthly fees from third-party merchants offering bogus text message subscriptions for things like flirting tips, horoscopes, and celebrity gossip. The complaint alleges that T-Mobile kept charging for the services even after subscribers complained, and that the company typically retained between 35 and 40 percent of the fees.

EUT-Mobile knew about these fraudulent charges and failed to stop them or take any action,EU FTC consumer protection director Jessica Rich told reporters on a conference call. The U.S. Federal Communications Commission (FCC) is also investigating T-MobileEUs alleged cramming, she added.

T-Mobile said the suit is without merit. In a statement, T-Mobile CEO John Legere said the company stopped billing for premium texting services in 2013 and created a program for customers to receive full refunds.

Settlement Talks Stalled

T-Mobile has worked recently to reverse years of subscriber losses. Despite gains in postpaid subscribers last year and in the first quarter of 2014, T-Mobile lost $151 million in the first three months of the year.

That market pressure might conceivably have been behind the alleged billing shenanigans, theorizes one market analyst we consulted.

EUGood or bad, these are the kind of things companies do when theyEUre faced with shareholder pressure to increase value,EU said Atlanta-based wireless analyst Jeff Kagan. EUAt this point, IEUm inclined to give T-Mobile the benefit of the doubt, because we donEUt have all...

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