The US Federal Trade Commission claims mobile phone service provider T-Mobile USA, made hundreds of millions of dollars by placing charges on mobile phone bills for unauthorised “premium” SMS subscriptions.
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, the FTC claims.
The watchdog said that 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.
It appears to have gotten away with it by burying the information in the phone bill where it was unlikely to be seen.
FTC Chairwoman Edith Ramirez said it was wrong for a company like T-Mobile to profit from scams against its customers when there were clear warning signs the charges it was imposing were fraudulent.
She said that the FTC wanted to make sure that T-Mobile repays all its customers for these crammed charges.
The FTC has alleged that because such a large number of people were seeking refunds, it was an obvious sign to T-Mobile that the charges were never authorised by its customers.
The refund rate likely significantly understates the percentage of consumers who were scammed.
The complaint against T-Mobile alleges that the company’s billing practices made it difficult for consumers to detect that they were being charged.
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.
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.
Sometimes T-Mobile claimed that consumers had authorised the charges despite having no proof that they had.