News & Information for Technology Purchasers NewsFactor Sites:       NewsFactor.com     Enterprise Security Today     CRM Daily     Business Report     Sci-Tech Today  
   
Home Enterprise I.T. Cloud Computing Applications Hardware More Topics...
You are here: Home / Communications / T-Mobile Accused of Bogus Fees
DDoS Protection Powered By Verisign
Did T-Mobile 'Cram' Customers? FTC Wants To Know
Did T-Mobile 'Cram' Customers? FTC Wants To Know
By Dan Heilman / NewsFactor Network Like this on Facebook Tweet this Link thison Linkedin Link this on Google Plus
PUBLISHED:
JULY
02
2014



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.

Like Us on FacebookFollow Us on Twitter
TOP STORIES NOW
MAY BE OF INTEREST
Salesforce.com is the market and technology leader in Software-as-a-Service. Its award-winning CRM solution helps 82,400 customers worldwide manage and share business information over the Internet. Experience CRM success. Click here for a FREE 30-day trial.
MORE IN COMMUNICATIONS
Product Information and Resources for Technology You Can Use To Boost Your Business

Network Security Spotlight
Russian Gang with Stolen IDs Hacks Hosting Company
In August, a Russian cyber gang obtained what researchers called “the largest cache of stolen data." Now, those hackers may be putting their ill-gotten gains to criminal use.
 
Dairy Queen Latest Retailer To Report Hack
Known for its hot fries and soft-serve ice cream, Dairy Queen just made cyber history as the latest victim of a hack attack. The fast food chain said that customer data at some stores may be at risk.
 
Lessons from the JPMorgan Chase Cyberattack
JPMorgan Chase is investigating a likely cyberattack. The banking giant is cooperating with law enforcement, including the FBI, to understand what data hackers may have obtained.
 

Enterprise Hardware Spotlight
AMD's New FX Series CPU Breaks Processing Speed Record
The new FX-8370 processor from Advanced Micro Devices has set a record for silicon processor speed, the company announced. Overclocked, the eight-core chip was measured at 8722.78 MHz.
 
Intel Intros Lightning-Fast PC Processors
Call it extreme. Intel just took the covers off its first-ever eight-core desktop processor, which is aimed at hardcore power users who expect more than the status quo from their computers.
 
HP Previews ProLiant Gen9 Data Center Servers
Because traditional data center and server architectures are “constraints” on businesses, HP is releasing new servers aimed at faster, simpler and more cost-effective delivery of computing services.
 

Mobile Technology Spotlight
Rumor Mill Puts Mobile Wallet in iPhone 6
Apple is moving toward the mobile wallet world with its next iPhone. The tech giant has partnered with retailers, banks and major payment networks to make it happen, according to Bloomberg.
 
Will iPhone Finally Catch Up with NFC Mobile Payment Ability?
Apple's latest version of the iPhone may have a mobile wallet to pay for purchases with a tap of the phone. The iPhone 6 reportedly is equipped with near-field communication (NFC) technology.
 
Visual Search To Shop: Gimmick or Game Changing?
Imagine using your phone to snap a photo of the cool pair of sunglasses your friend is wearing and instantly receiving a slew of information about the shades along with a link to order them.
 

Navigation
NewsFactor Network
Home/Top News | Enterprise I.T. | Cloud Computing | Applications | Hardware | Mobile Tech | Big Data | Communications
World Wide Web | Network Security | 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.