T-Mobile has agreed to pay at least $90 million to settle charges that it allowed outside companies to charge subscribers without their knowledge or permission.
The settlement resolves a case filed earlier this year, in which the Federal Trade Commission (FTC) and the Federal Communications Commission (FCC) accused the company of making hundreds of millions of dollars by sending people spam text messages.
As part of the “cramming,” T-Mobile subscribers were billed for those text messages — which offered flirting tips, horoscopes and other data — though many never signed up to receive them.
“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,” FTC Chairwoman Edith Ramirez said in a statement announcing the settlement. “Consumers should be able to trust that their mobile phone bills reflect the charges they authorized and nothing more.”
Federal regulators have taken a close eye to cramming in recent months, to combat what many see as a new avenue for scammers.
Friday’s announcement comes just a day after Sprint was charged by the Consumer Financial Protection Bureau for similar practices, and as possible additional penalties on Sprint loom.
According to federal regulators, T-Mobile received 35 to 40 percent of each charge placed on people’s cellphone bills, which typically cost $9.99 per month each.
The FTC claimed that people’s attempts to get refunds should have been “an obvious sign to T-Mobile that the charges were never authorized by its customers.”
The company’s phone bills often stretched on for more than 50 pages in length, however, making it hard for many people to tell if they had been charged unfairly, the FTC said.
Under the terms of the settlement, T-Mobile is paying out full refunds to its customers who were charged the illegal fees, as well as $18 million in fines and penalties to all 50 states and the District of Columbia, plus $4.5 million to the FCC. If the money does not add up to $90 million, T-Mobile will give the balance to the FTC.