T-Mobile reaches $90 million settlement with feds over cramming
As part of its settlement with the Federal Trade Commission, T-Mobile will pay at least $90 million in customer refunds, as well as penalties and fines over complaints that it put bogus charges on customer bills.
T-Mobile will pay at least $90 million to settle a complaint filed against it by the Federal Trade Commission, which accuses the wireless operator of cramming unwanted charges on customer bills.
The FTC announced that a deal had been reached with T-Mobile on Friday. In addition to refunding customers, T-Mobile will pay a $4.5 million fine to the Federal Communications Commission, as well as an additional $18 million in fines and penalties to attorney generals in every state plus the District of Columbia.
"Mobile cramming is an issue that has affected millions of American consumers," FTC Chairwoman Edith Ramirez said in a statement. "Consumers should be able to trust that their mobile phone bills reflect the charges they authorized and nothing more."
Cramming is a practice by which mobile operators add charges to mobile bills from third-party companies without the knowledge or consent of subscribers.
The Federal Trade Commission has been aggressively pursuing companies it has suspected of engaging in this illegal practice. The FTC has filed at least seven complaints against companies involving mobile cramming since 2013. One of those cases was a complaint against T-Mobile filed in July.
In October, AT&T agreed to a $105 million settlement with the government over its cramming case. At the time of the settlement, FCC Chairman Tom Wheeler said that nearly 20 million customers a year have been victims of cramming.
In November 2013, AT&T, T-Mobile, Sprint and Verizon agreed to stop billing customers for third-party services.
The FTC has worked closely with other federal agencies to pursue these cases, including the Federal Communications Commission and more recently the Consumer Financial Protection Bureau. Earlier this week, the CFBP filed a lawsuit against Sprint for its illegal cramming practices. The CFPB was created in 2010 by the Dodd-Frank Wall Street Reform and Consumer Protection Act to protect consumers in the financial sector. Agency officials say the organization has enforcement authority over companies that process payments over mobile phones.
T-Mobile did not respond to a request for comment at the time of publication. The story will be updated with the company's statement when it is issued. But when the FTC complaint was filed, T-Mobile CEO John Legere wrote on the company's site that the allegations were "unfounded and without merit."