Newsletters
News & Information for Technology Purchasers NewsFactor Sites:       NewsFactor.com     Enterprise Security Today     CRM Daily     Business Report     Sci-Tech Today  
   
This ad will display for the next 20 seconds. Click for more information, or
Home Enterprise I.T. Cloud Computing Applications Hardware More Topics...
Eliminate costly downtime!
Find out how with Free White Paper
& enter to win a Samsung Galaxy Note

www.apc.com
Cloud Computing
24/7/365 Network Uptime!
Average Rating:
Rate this article:  
Did T-Mobile
Did T-Mobile 'Cram' Customers? FTC Wants To Know

By Dan Heilman
July 2, 2014 11:28AM

    Bookmark and Share
The FTC claims, “T-Mobile knew about these fraudulent charges and failed to stop them or take any action," but T-Mobile says the suit is without merit. The FTC lawsuit coincides with T-Mobile finalizing its $32 billion merger with Sprint. If that deal is approved, it would unite the nation’s third- and fourth-largest carriers.
 



Those puzzling, voluminous lines of charges on cell phone bills might soon cost a carrier instead of the consumer. The U.S. Federal Trade Commission Tuesday filed a lawsuit alleging that T-Mobile has padded its profits in recent years with charges concealed on its bills and not ordered by its customers. It's an illegal billing practice known as cramming and the FTC is not amused.

In a civil complaint filed in federal court in Seattle, the FTC alleges that T-Mobile charged consumers monthly fees from third-party merchants offering bogus text message subscriptions for things like flirting tips, horoscopes, and celebrity gossip. The complaint alleges that T-Mobile kept charging for the services even after subscribers complained, and that the company typically retained between 35 and 40 percent of the fees.

“T-Mobile knew about these fraudulent charges and failed to stop them or take any action,” FTC consumer protection director Jessica Rich told reporters on a conference call. The U.S. Federal Communications Commission (FCC) is also investigating T-Mobile’s alleged cramming, she added.

T-Mobile said the suit is without merit. In a statement, T-Mobile CEO John Legere said the company stopped billing for premium texting services in 2013 and created a program for customers to receive full refunds.

Settlement Talks Stalled

T-Mobile has worked recently to reverse years of subscriber losses. Despite gains in postpaid subscribers last year and in the first quarter of 2014, T-Mobile lost $151 million in the first three months of the year.

That market pressure might conceivably have been behind the alleged billing shenanigans, theorizes one market analyst we consulted.

“Good or bad, these are the kind of things companies do when they’re faced with shareholder pressure to increase value,” said Atlanta-based wireless analyst Jeff Kagan. “At this point, I’m inclined to give T-Mobile the benefit of the doubt, because we don’t have all the facts yet and this kind of thing is far from isolated.”

The FTC suit didn’t itemize the number of customers affected by the alleged overcharges or the total value of the charges, Rich told reporters. She added that the commission had been in settlement talks with T-Mobile before the suit was announced, but didn’t reach an agreement. The FTC’s goal is to secure refunds for all consumers affected.

Will It Matter?

The lawsuit comes as T-Mobile tries to reverse its fortunes via an aggressive marketing campaign branding itself as the “un-carrier” -- that is, spurning typical wireless carrier behavior by eliminating contracts, dropping international roaming charges and offering to pay competitors’ customers $650 to switch over to its service.

The suit also coincides with T-Mobile finalizing a $32 billion merger with Sprint, a deal which, if approved, would unite the nation’s third- and fourth-largest carriers.

Analyst Kagan says that while the FTC suit might cause T-Mobile some embarrassment, the long-term effects should be minimal.

“Typically, when a company gets caught doing this kind of thing, they get slapped on the wrist, they issue some refunds, and they move on,” says Kagan. “This won’t put them out of business. It isn’t the end of the world.”
 

Tell Us What You Think
Comment:

Name:

CKH:

Posted: 2014-07-03 @ 1:34pm PT
This can never happen with Republic Wireless because they have a flat rate, unlimited, no contract service for $25 a month. No added charges, ever. They also have an unlimited talk and text plan for $10 a month. They sell the MotoX for $299 and the MotoG for $149. I recommend them from over a year of personal experience.



APC has an established a reputation for solid products that virtually pay for themselves upon installation. Who has time to spend worrying about system downtime? APC makes it easy for you to focus on business growth instead of business downtime with reliable data center systems and IT solutions. Learn more here.


 Cloud Computing
1.   Oracle Releases a Slew of Upgrades
2.   Cloud Wars: AWS vs. Microsoft, IBM
3.   Yammer Moved to Office 365
4.   IBM, California Partner in the Cloud
5.   Dropbox for Business Boosts Security


advertisement
Amazon Intros Zocalo Storage Service
Online storage and sharing for business.
Average Rating:
Avaya Pressing Hard on Cloud-Based UC
Provides easier, faster provisioning.
Average Rating:
Cisco Woos More Devs with DevNet
To create new network-aware apps.
Average Rating:


advertisement
Product Information and Resources for Technology You Can Use To Boost Your Business

Network Security Spotlight
Tor Internet Privacy Service Warns Users It Was Breached
You may never have heard of the Tor Project, but the Internet privacy service is making headlines. Tor’s devs say users might be victims of an attack launched against the project earlier this year.
 
Canadian Government Charges China with Cyberattack
The government of Canada is not happy with China. Canadian officials have accused "a highly sophisticated Chinese state-sponsored actor" of launching a cyberattack on its National Research Council.
 
Researchers Working To Fix Tor Security Exploit
Developers for the Tor privacy browser are scrambling to fix a bug revealed Monday that researchers say could allow hackers, or government surveillance agencies, to track users online.
 

Enterprise Hardware Spotlight
AMD's ARM-Based Opteron Out in $3K Dev Kit
It's dubbed "Seattle" and it's AMD's first 64-bit ARM-based Opteron processor. The low-power chip is being released as part of AMD’s Opteron A1100-series developer kit, and aimed at high-end data center needs.
 
Apple Updates MacBook Pros, Cuts Prices Up to $100
The popular MacBook Pro laptop line just got an update and a price cut of as much as $100. The MacBook Pro with Retina display now includes faster processors and double the memory.
 
Dell, BlackBerry Not Sweating Apple-IBM Alliance
IBM's recent move to partner with Apple to sell iPhones and iPads loaded with corporate applications has excited investors in both companies, but two rivals say they are unperturbed for now.
 

Mobile Technology Spotlight
Virgin Mobile Offers Custom Smartphone Plans
As the wireless carrier wars continue heating up, Virgin Mobile just threw the customization coal onto the fire. The firm has debuted a no-annual-contract plan with rates based on individual use.
 
Collaboration Provider Asana Revamps Mobile App
Asana, a collaboration software provider started by a Facebook founder, is now out with a rebuilt native iOS mobile app. It replaces one that even the company admits was not up to par.
 
FTC Wants Fix for 'Perfect Scam' of Mobile Cramming
The U.S. Federal Trade Commission has issued new guidelines to curb “mobile cramming,” a troublesome practice that adds unauthorized third-party charges to mobile phone bills.
 

Navigation
NewsFactor Network
Home/Top News | Enterprise I.T. | Cloud Computing | Applications | Hardware | Mobile Tech | Big Data | Communications
World Wide Web | Network Security | Data Storage | CRM Systems | Microsoft/Windows | Apple/Mac | Linux/Open Source | Personal Tech
Press Releases
NewsFactor Network Enterprise I.T. Sites
NewsFactor Technology News | Enterprise Security Today | CRM Daily

NewsFactor Business and Innovation Sites
Sci-Tech Today | NewsFactor Business Report

NewsFactor Services
FreeNewsFeed | Free Newsletters

About NewsFactor Network | How To Contact Us | Article Reprints | Careers @ NewsFactor | Services for PR Pros | Top Tech Wire | How To Advertise

Privacy Policy | Terms of Service
© Copyright 2000-2014 NewsFactor Network. All rights reserved. Article rating technology by Blogowogo. Member of Accuserve Ad Network.