Earlier this year, the United States Federal Trade Commission filed a complaint against T-Mobile, accusing the carrier of "cramming" or charging customers for unauthorized SMS subscriptions that delivered information like horoscopes for prices up to $9.99 per month.
Though T-Mobile initially called the FTC's complaint "unfounded and without merit," it today reached a settlement [PDF] that will see it paying out more than $90 million to consumers that were affected by its practices. The carrier will also be required to inform all current and former customers who paid the illicit charges about the refund program.
In a statement, FCC Chairman Tom Wheeler praised the settlement as a win for consumers and pledged to continue to fight "unjust and unreasonable business practices committed by the nation's carriers."
"Cramming is a significant problem. For too long, millions of consumers have been scammed billed for bogus charges on their phone bills for services they didn't request. This is unacceptable. Today's settlement is a win for consumers who have been victimized by cramming. It means compensation for T-Mobile customers who were fraudulently billed for third-party services that they did not want or authorize. And it goes one step further. Today's action will also help protect all of T-Mobile's customers from bogus third-party charges in the future."
Along with T-Mobile, several other carriers have been targeted by the FTC for the same unsavory practices. AT&T paid out $105 million in penalties in October, and Sprint is facing a similar fine. In a statement released earlier this year, T-Mobile said that it stopped billing for Premium SMS services in 2013 and had already put a "proactive program" in place to provide full refunds for customers, but the government found that many customers went uncompensated.
Along with providing refunds for customers, T-Mobile's $90 million fine will also include $18 million in fines to attorneys in all 50 states plus the District of Columbia and a $4.5 million fine to be paid to the Federal Communication Commission.
News of T-Mobile's settlement comes just days after the company announced an eighth Un-carrier initiative, which will allow customers to roll over monthly unused data, storing it for up to 12 months.
Top Rated Comments
Eh. I'm not a big fan of sending people to jail. If all that they did was steal small amounts of money from large amounts of people, I'm content with them simply paying all those people back, plus interest.
So, next time I'm doing something illegal I just have to make sure I have a big corporation supporting me?:D I never learned how corporations work in this country...
So, yes, it is a lot simpler to require them to pay restitution than to sort these things out.
They took the best course of action by making the corporation (and all the share holders) pay back any monetary damages. Unless the CEO made a decree that scamming customers is their priority, he can't and shouldn't be arrested.