Spotting the signs of a crampage: Lessons from the FTC’s proposed settlement with T-Mobile

Flashes at a railroad crossing. That chirp from a smoke detector. The “check engine” light on the dashboard. Those are just a few warnings that merit your attention. The FTC’s proposed settlement with T-Mobile – which imposes at least $90 million in financial remedies, including full consumer refunds – highlights another warning that businesses should heed: clear indications that consumers are getting billed without consent.

The FTC sued T-Mobile in July 2014 for its role in cramming unauthorized charges onto mobile phone bills. According to the complaint, fraudsters used an arsenal of underhanded tactics to place monthly charges for ringtones, “love tips,” etc., on consumers’ T-Mobile bills. Who pocketed a 35-40% piece of the action? T-Mobile.

The FTC says T-Mobile made matters worse by burying the unauthorized charges in bills that could run 50 pages or more, making it even tougher for consumers to figure out what was going on. For customers who checked their bills online, T-Mobile lumped fees for third-party subscriptions into one category called “Use Charges,” a nondescript descriptor if there ever was one. If consumers clicked to expand that field, all they got was a similarly unenlightening line listing “Premium Services.” If a consumer finally found the unexplained fee – a big if, under the circumstances – the billing line for the illegal charge said something like “8888906150BrnStorm23918." Clear? As mud, the FTC alleged.

Prepaid customers had it even worse, if that’s possible. Since they don’t get bills, T-Mobile just debited their accounts for the unauthorized charge without their knowledge.

So what about those warnings the FTC says T-Mobile didn’t heed? T-Mobile heard from thousands of customers who cried foul about the unauthorized charges. And it wasn’t just an occasional customer kvetch. In some cases, T-Mobile was charging people for services that had refund rates as high as 40% in a single month.

That wasn’t the only warning. Industry auditors, law enforcement actions, private lawsuits, and press reports all told the same story: T-Mobile customers were getting stuck with charges they hadn't agree to. But according to the FTC’s complaint, the company kept pocketing the proceeds rather than responding appropriately in the face of undeniable evidence that it was billing people without their authorization.

To settle the case, T-Mobile has agreed to offer full refunds to affected consumers. Under the proposed order, which requires court approval, T-Mobile must contact all crammed customers – current and former – to clearly explain how they can get their money back. In addition, T-Mobile will pay $18 million in fines and penalties to the state AGs and an additional $4.5 million to the FCC. In total, the proposed order requires T-Mobile to turn over at least $90 million in refunds and other financial remedies.

The settlement also puts three far-reaching changes in place to protect consumers in the future:

  • T-Mobile will have to get people’s express informed consent before placing third-party charges on their bills;
  • Consumers will be sent a purchase confirmation – separate from their phone bill – each time a third-party charge is placed on their bill; and
  • T-Mobile will have to tell customers about options to block third-party charges from being placed on their bills in the first place.

The implications extend far beyond this industry. The primary lesson of the proposed T-Mobile settlement is that companies need to get customers’ express authorization before billing them. That fundamental protection applies with full force in the mobile arena.  Furthermore, savvy businesses take early and decisive action at the first signs of unauthorized billing. The T-Mobile cases offers 90 million reasons why it’s unwise to look the other way when consumers and others are warning you that illegal activity is afoot.



How will I know if I was involve in this or if I was charged

We spotted these charges and fraud years ago and pointed them out but they said it was too late to complain after we had been billed and would not credit us. They would send it in a text and not put what the text was for and when the text was read they would begin the charges. We had to block third party stuff and also I can't even go in linef to ATT to download a ring tone because we have to protect our account. I'm glad they finally stopped you.

I'm what AT&T calls a "combined billing customer", and since news of this came out, I have not been able to access the Mobile part of my bill. I have spent hours on the phone with AT&T techs trying to change passwords, link the accounts, or whatever (I'm not tech savvy) to no avail. Called back, they wanted to do the very same thing. It's amazing that they don't have technicians who are capable of keeping their own website running correctly...unless they don't want me to see my wireless bills.

In response We are going through the same thing. and ATT keeps sending me text msgs stating I might be eligible for refunds from the class action lawsuit. Since I applied for class action they keep billing us for data usage overages although my phone is home with me all day with my wi-fi turned on 24/7 only using 4g when away from home how can I be using 4g of data when I send no more than 5 txt msgs per month???? The only way is all the ATT apps preinstalled on my phone that you cannot remove even if you don't use them and most of them are 3rd party apps but ATT does not ENDORSE any of these apps so why are they permanently on my phone oh and hacking my phone is illegal - hack my phone to remove the bogus ringtones, family tracking, city id, and other 9.99 month apps on my phone.
ON top of all this I too am a "COMBINED BILLING CUSTOMER" with untraceable data overages every month. so my bill averages 160-189.00 per month plus the 15.99 for an extra 1g of data.

This is how ATT treats its loyal 15-20+ years as a paying customer because if the bill isn't paid up at least 125.00 per month on or before the 6th of the month we are disconnected without notice.

another scam is getting a collection bill from some unknown bill collector demanding payment of 1,500 in charges for an AT T cellular phone from another state we never been too. pay in 15 days or they'll sue us in court and disconnect our service. AT T was involved because they disconnected our phones for nonpayment of past due amounts. 17 days after receiving the collection notice. I had to go off on ATT customer service reps and several management and credit heads to no avail. I told them I contacted the FTC, they changed their customer service demeaning practices and 2 months later service was restored without payment for fraudulent charges.
They are not intimidated by the BBB, SBA, EDC, or FCC they basically laughed at these threats.
KEEP UP THE GOOD WORK FTC consumers are lucky you still have these big bullies in check for us.

In reply to the last comment re: ATT charges THANK YOU for the heads up on locking you out of viewing your bill online because of your password not being "YOUR PASSWORD" I never thought of this because my husband still get paper billing and writes paper checks and has a smartphone to play slots on and his paper trail of mail box bills. he likes things the old way. When I tell him your reply and ATT trick you will make his day re: his tree killing paper bill mailed to us. PASSWORD PROTECTION - yeah for ATT after 30+ years as a customer mobile and business I am embarrassed to admit.

where can i find out if i have a refund?

I made an over $900 payment to ATT in Dec. Looking online recently I discovered the $900 payment posted BUT only $600 of it actually credited to my account with a past due balance carried forward of $325!!! I've been finding bad charges since last summer and when I call I get told the charges are valid and I have to talk to my bank. I have talked to my bank! I'm frustrated, to say the least!

I think that it is wonderful the FTC is going after these companies, its unfortunate that federal investigations of wireless service providers is necessary. My experience with T-Mobile was horrible, to put it mildly. I've have constant billing and service problems with T-Mobile that stem from their incessant unlawful business practices involving third parties and their failure to professionally document and record changes made to customer accounts. They then refuse to provide copies of customer records upon lawful request or any documentation to substantiate where charges are comping from. They also refuse to work with customers regarding problems with their service, this includes wifi, portable modem and internet hotspot issues. T-Mobile does not even comply with lawfully issued subpoenas for the customer's own data and records. With so much to hide how could it not be more obvious that there is something fishy going on?

How do i find out if I have a refund coming?

How about Tmobile charging insurance and warranty for the mobile devices on monthly basis and when my mobile device malfunctioned Tmobile does not replace mobile device because what ever the malfunction be they do not cover and I would have to pay an extra up front fee in order for replacement or fix. So why pay insurance and warranty for years, for every device I've ever owned purchased from Tmobile and then come to find out I'm never covered when my device malfunctions or breaks? They ask for extra up front fee to replace or fix? Why keep paying insurance andwarranty?

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