FTC Accuses T-Mobile of Knowingly Charging Customers for Fraudulent Services

The United States Federal Trade Commission today filed a complaint against T-Mobile, accusing the carrier of charging customers for unauthorized SMS subscriptions that delivered information like horoscopes and celebrity gossip at prices up to $9.99 per month.

T-Mobile reportedly collected 35 to 40 percent of the amount charged to consumers, at times continuing to bill customers even after it was clear the charges were fraudulent. According to the FTC, T-Mobile made "hundreds of millions of dollars" using these tactics.

The FTC suggests that the charges were unauthorized because of the high volume of T-Mobile customers seeking refunds. The company has allegedly received a high number of consumer complaints since 2012. T-Mobile is also said to have made it difficult to detect the charges, as a summary bill did not show a third-party charge or a recurring subscription. T-Mobile bills also 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.

T-Mobile also failed to provide full refunds to customers after the charges were discovered. The FTC is asking for a court order to prevent T-Mobile from continuing to charge customers for fraudulent services and to provide full refunds for its "ill-gotten gains."

T-Mobile has not yet commented on the FTC's complaint, but the company's outspoken CEO, John Legere, will undoubtedly have a response.

In recent months, T-Mobile has worked hard to distinguish itself from other mobile phone carriers with its "UnCarrier" initiatives designed to disrupt traditional mobile service. The company has uncoupled device costs from service costs, introduced a Jump upgrade plan, provided unlimited texting and 2G data in 100 countries, offered customers up to $350 to switch carriers, and announced plans to allow customers to "test drive" the service.

Update 1:30 PM PT: T-Mobile has released a statement calling the FTC's complaint "unfounded and without merit." T-Mobile goes on to state that it stopped billing for Premium SMS services last year and has launched a "proactive program" to provide full refunds for customers.