FTC Cracks Down On T-Mobile For Massive Bogus Charges And Fee Scam
from the whoops dept
So you know all that stuff about how T-Mobile has been trying to position itself as the "uncarrier" that actually treats customers right instead of bilking them at every opportunity? Yeah, that would be a lot more convincing if the FTC didn't just come down on the company for bilking millions in bogus charges from people. It appears that T-Mobile was engaged in a form of cramming that signed subscribers up to $9.99/month "subscriptions" to content they'd never asked for:In a complaint filed today, the Federal Trade Commission is charging mobile phone service provider T-Mobile USA, Inc., with making hundreds of millions of dollars by placing charges on mobile phone bills for purported “premium” SMS subscriptions that, in many cases, were bogus charges that were never authorized by its customers.Not only were the frequent complaints and cancellations of the service a clear sign that T-Mobile should have known these charges were fraudulent, but T-Mobile seemed to go out of its way to disguise the nature of these charges to try to minimize the complaints:
The FTC alleges that T-Mobile received anywhere from 35 to 40 percent of the total amount charged to consumers for subscriptions for content such as flirting tips, horoscope information or celebrity gossip that typically cost $9.99 per month. According to the FTC’s complaint, T-Mobile in some cases continued to bill its customers for these services offered by scammers years after becoming aware of signs that the charges were fraudulent.
The complaint against T-Mobile alleges that the company’s billing practices made it difficult for consumers to detect that they were being charged, much less by whom. When consumers viewed a summary of their T-Mobile bill online, according to the complaint, it did not show consumers that they were being charged by a third party, or that the charge was part of a recurring subscription. The heading under which the charges would be listed, “Premium Services,” could only be seen after clicking on a separate heading called “Use Charges.” Even after clicking, though, consumers still could not see the individual charges.Here's the example the FTC provided showing how T-Mobile hid these bogus charges:
The complaint also alleges that T-Mobile’s full phone bills, which can be longer than 50 pages, made it nearly impossible for consumers to find and understand third-party subscription charges. After looking past a “Summary” section as well as an “Account Service Detail” section, both of which described “Usage Charges” but did not itemize those charges, a consumer might then reach the section labeled “Premium Services,” where the crammed items would be listed.
According to the complaint, the information would be listed there in an abbreviated form, such as “8888906150BrnStorm23918,” that did not explain that the charge was for a recurring third-party subscription supposedly authorized by the consumer. In addition, the complaint notes that consumers who use pre-paid calling plans do not receive monthly bills, and as a result the subscription fee was debited from their pre-paid account without their knowledge.
And, of course, the story gets worse. Even if people figured out what the hell was going on, and finally got someone on the phone at T-Mobile customer service to sort it out, the company often failed to provide them with full refunds.
When consumers were able to determine they were being charged for services they hadn’t ordered, the complaint alleges that T-Mobile in many cases failed to provide consumers with full refunds. Indeed, the FTC charged that T-Mobile refused refunds to some customers, offering only partial refunds of two months’ worth of the charges to others, and in other cases instructed consumers to seek refunds directly from the scammers – without providing accurate contact information to do so.T-Mobile has done a bunch of consumer friendly things in the recent past, but these sort of practices suggest that the traditional soul of phone companies, always looking to squeeze extra fees out of users is alive and well within the company.
The complaint also notes that in some cases, T-Mobile claimed that consumers had authorized the charges despite having no proof of consumers doing so.
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Filed Under: consumers, cramming, fee scams, ftc, hidden charges
Companies: t-mobile
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So it's pretty easy to get T-Mobile to remove them, but you have to specifically go out of your way to identify them and contact T-Mobile about it.
It's a fairly obtuse process (though I've heard that AT&T/Verizon will rake you through the coals before they'll willingly remove them or credit you), but it's that way because the carriers get a cut of the cramming fees, so they'd rather just let them happen as long as nobody is looking too closely and rake in some "free" money.
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This is absolute proof that you are nothing but a T-Mobile shill!
/sarc
These types of stories are so crazy they almost give me the impression that they were preplanned by the govt and T-Mobile to give us the appearance that the government is protecting consumers.
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congrats
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Moreover shouldn't the FTC be going after the third parties signing people up for these services rather than the the secondary liability target?
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Not an unfair call, but note from the article (emphasis added):
It sounds from the claim that T-Mobile is complicit with the scammers, making them directly liable - indeed, earlier in the article it mentions "charging [T-Mobile] with making hundreds of millions of dollars", meaning T-Mobile is directly profiting from this.
There's nothing in the article that mentions whether or not anyone is also going after the scam services directly.
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But T-Mobile was not busted for signing the people up. They were fined for deliberately making the charges difficult to find and remove. Thereby making them more money.
They were helping to enable the scammers for their own profit. This is not a good thing and should be fined at a much higher level. Take all the money they made off this practice and ad 20%. That should be the fine.
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Face it, there are very few telecommunications co. that people -like-
If you've never heard of NPS(R), or Net Promoter Score,
http://www.netpromoter.com/why-net-promoter/know/
it's a way to see how your customers view your business. In open markets, this is of vital importance. If your market consists of almost total regulatory lock in and government monopolies, then it's quite unimportant. Markets like, say, Cell phone, telephone, internet, cable, or satellite TV.
I've often thought that the telco and cable/satellite business should get a message from the FCC and FTC to the effect of:
"OK boys, the gloves are OFF. Get your NPS(R) scores up to at least 7 within two years. If you fail at that, then all the restrictions, all the subsidies, all the laws that make you gate keepers go away. Get a score below 5, and the C level executives will be barred for life from holding a management position."
What I'd really like is for the government to remove ALL the barriers to entry for competition RIGHT NOW. One thing they could do that wouldn't be very difficult at all is make a rule that any frequency spectrum held by a telco that did not have at least 40% utilization over 2 years would go back to auction, and the previous owner would be forever banned from bidding on it again. Some telcos, in my opinion (I'm looking at YOU AT&T) hold vast swaths of RF spectrum with out an ounce of intention of ever putting it into service for customers. It's held simply to keep ILEC's and CLEC's from obtaining it and competing.
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Re: Face it, there are very few telecommunications co. that people -like-
hell, i'm about to go full-bore commie in reaction to the unrestrained capitalist imperialism shitty system 'we' have now...
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nice reportage...not
A good report would have investigated why T-Mobile is being singled out.
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Re: nice reportage...not
In our telecom regulations, the bill is a conduit for a wide array of sewage. All the telcos open up and encourage a third party market. That market isn't vetted to prove that the consumer is making a highly conscious decision.
The telcos all know there are third party providers that cram charges with little to no consumer awareness, but they aren't required or ABLE to categorically remove a service provider because somebody may actually want those trivia SMS messages.
So I'm not going to leap to telcos are innocent, because service provider vetting is too weak to protect morons in a hurry from deception or from outright malware silent enrollment, but ultimately it's the service providers that are offering a somewhat desirable service that appears to be free at the moment only to appear as an indecipherable abbreviation buried several clicks deep in the online bill.
T-Mo should make access to attached services easy to find and easy to understand. On my bill, with call detail collapsed, it takes one click to see crams. That visibility causes a lot of call center traffic. T-Mo can be held specifically accountable because they bury crams as a way to cut call center costs and still meet tariffed call handling requirements.
The FTC aren't saying crams only exist on T-Mo.
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Addressed already
https://t-mobile.jive-mobile.com/#jive-document?content=%2Fapi%2Fcore%2Fv2%2Fdocuments%2F9863
I found that link via the following article:
http://techcrunch.com/2014/07/01/ftc-accuses-t-mobile-of-allowing-shady-scams-to-sneak-onto- your-phone-bill/
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Something doesn't seem right here
This sounds more like the attack of a competitor than the actions of a governing body. I think this bears greater investigation; someone other than the FTC seems to have pulled strings to get this (and only just this) complaint out.
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(cough AT&T)
Similar third party fraud...
Finger Pointing (or is it painting?) with the enemy.
Phone tag.
Promises.
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All about the money
I'm sure these companies have meetings where the risk-assessment department decides that it's better to scam people. After all, they know that X% of people will complain, leaving 100-X% still paying the bogus fees.
For example, if 10 million people are charged $10 a month, that's $100 million. If 50% of those people complain, maybe the company can talk some people out of a refund. That leaves 5 or 6 million people still paying the $10 fee... and like any fee, the company brings in money without providing a product or service.
$50 to $60 million a month is pretty good for not doing anything.
Is this right? Of course not, but they have shareholders to answer to.
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The scammers name is Jason Hope, from Arizona. He allegedly has over 20 LLC companies running these texting scams and is raking in billions of dollars a year and throwing million dollar parties in his house that's larger than Bill Gates' house.
http://www.youtube.com/embed/F9MQAfh-bCE
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Maybe you should post the reply by T-Mobile?
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Sounds like revenge
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Merger interference
After all, AT&T and Verizon have done and do the same, and many similar "scams" have also been done on credit cards. All have a common recurrent theme: You somehow get conned into agreeing to the subscription...but good luck getting out of it.
It is the timing that strikes me as suspicious here: T-Mobile and Sprint are talking about a merger...and then here is this. I suspect it is a purely political move, triggered by AT&T or Verizon, to sink the merger.
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