T-Mobile US Inc, the fourth largest wireless carrier in the United States agreed to pay a penalty of $90 million to settle the mobile cramming case filed by the Federal Trade Commission (FTC).
In a statement, FTC Chairwoman Edith Ramirez said, “Mobile cramming is an issue that has affected millions of American consumers, and I’m pleased that this settlement will put money back in the hands of affected T-Mobile customers. Consumers should be able to trust that their mobile phone bills reflect the charges they authorized and nothing more.”
T-Mobile billed customers with unauthorized charges
In July, The FTC filed a lawsuit against T-Mobile on allegations that it has been billing customers with bogus charges. The commission alleged that the wireless carrier profited millions of dollars from the hidden charges in phone bills for premium, third-party texting services ($9.99-per-month horoscopes or celebrity gossip updates) unauthorized by customers.
The FTC found that T-Mobile was charging consumers for services with refund rates of as much as 40% per month. The commission said it was obvious that the charges were not authorized by consumers because of the large percentage of those seeking for refunds
Details of the settlement
The FTC said T-Mobile will refund $67.5 million to affected customers. In addition, the wireless carrier will also pay $18 million in fine and penalties to the attorney general in 50 states and the District of Columbia and $4.5 million to the commission.
Under the terms of the settlement, T-Mobile will be required to provide full refunds to all affected consumers. The company must pay at least $90 million in redress of other payment. If the company fails to reach that amount, the balance will be remitted to the FTC for additional consumer redress, consumer education or other users.
T-Mobile is required to contact all former and current customers affected by its mobile cramming practices regarding the refund program and claims process in a clear and conspicuous manner.
The settlement also required T-Mobile to provide full refunds to consumers. It must also obtain consent from consumers before putting third-party charges on their bills and to ensure that consumers are informed about any third-party charges on their bills. The wireless carrier must also provide information to consumers regarding the option to block third-party charges.