The Federal Communications Commission (FCC) on Friday announced a settlement of at least $90 million with T-Mobile to resolve an investigation into allegations that T-Mobile billed customers millions of dollars in unauthorized third-party subscriptions and premium text messaging services. "Yet again we are faced with a phone company that profited while its customers were fleeced by third parties who placed unauthorized charges on their phone bills," said Travis LeBlanc, Chief of the FCC’s Enforcement Bureau.
The Enforcement Bureau launched its investigation after receiving consumer complaints alleging that T-Mobile customers were billed for unauthorized charges for subscriptions to third-party services that they did not request or authorize. These subscription charges were typically $9.99 per month. As T-Mobile customers inquired and learned about the third-party charges T-Mobile assessed on their bills, many complained that they did not authorize such charges, and sought refunds.
In some instances, T-Mobile provided refunds, but there were numerous customers who were billed for unauthorized third-party charges and were not compensated. While T-Mobile tracked third parties whose unauthorized charges resulted in T-Mobile issuing refunds to customers, even when the refund rate for a third- party merchant exceeded 15 percent, T-Mobile would nevertheless still continue to charge its customers for other subscriptions offered by that merchant.
FCC's investigation uncovered that T-Mobile charged its customers for some subscriptions with refund rates as high as 40 percent in a single month.
Under the terms of the agreement, T-Mobile has agreed to a $90 million settlement, including a minimum of $67.5 million to fund and operate a consumer redress program that will give refunds to victims of its unlawful cramming activities; if consumer claims exceed this amount, T-Mobile will continue to pay them. In addition, T-Mobile will pay $18 million to state governments participating in the settlement, and will make a $4.5 million penalty payment to the U.S. Treasury.
Since January 2014, the FCC has taken seven enforcement actions against carriers for alleged cramming and slamming violations. The most recent action was in October 2014 against AT&T Mobility,
which paid $105 million to resolve an investigation into allegations that the company billed customers millions of dollars in unauthorized third-party subscriptions and premium text messaging services.