How T-Mobile Made Hundreds Of Millions Charging Customers For "Bogus" Services

Tyler Durden's picture




 

In yet another case of corporate malfeasance (which we are sure will see heavy jail sentences and sever punishments), the Federal Trade Commission is charging T-Mobile 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. Content such as flirting tips, horoscope information or celebrity gossip was charged to customers unknowingly and even when customers figured it out, T-Mobile failed to provide consumers with full refunds. Is it any wonder Telcos are doing so well?

What to look for in your bill to see if you were duped by your caring telco:

From the lawsuit (link)

Defendant has not obtained authorization from consumers before charging them for Third-Party Subscriptions. Instead, the third-party merchants or billing intermediaries purportedly have obtained authorization. In many cases, however, these third parties have failed to obtain authorization from consumers.

Defendants’ phone bills include charges for its own services and third-party services. For consumers who receive their bills online, Defendant has provided an online summary:


In this summary, third-party charges, including for Third-Party Subscriptions, are included in the total for “Use Charges.” If the consumer clicked to expand the field for “Use Charges,” the consumer saw the following screen:

The category “Use charges” has included such charges as text messaging, as well as “Premium Services.” This screen, however, provides no explanation that “Premium Services” includes third-party charges for recurring Third-Party Subscriptions, nor does this section provide any additional information about the charges

A breakout of the actual third-party charges has typically appeared in the middle or towards the end of the bill, which in some instances may exceed 50 pages in length, under the heading “Premium Services.”

The information listed in this subsection has appeared in an abbreviated form (“8888906150BrnStorm23918”) that has not provided detailed information to the consumer about the nature of the charge. It has not explained that the charge was for a recurring Third-Party Subscription that the consumer purportedly authorized.

Some consumers do not even receive mobile phone bills. Consumers with pre-paid accounts do not receive monthly bills from Defendant; instead, these consumers pay a certain amount of money upfront for a specific number of minutes. When an unauthorized charge for $9.99 has been charged to these consumers’ accounts, Defendant has deducted $9.99 worth of minutes from their available balance. Defendant typically has provided no notice to the consumer of the charge.

* * *

Full FTC Statement

FTC Alleges T-Mobile Crammed Bogus Charges onto Customers' Phone Bills

T-Mobile Was Aware For Years that Charges Were Not Authorized by its Customers

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.  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.

"It's 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," said FTC Chairwoman Edith Ramirez. "The FTC's goal is to ensure that T-Mobile repays all its customers for these crammed charges."

In a process known as "third-party billing," a phone company places charges on a consumer's bill for services offered by another company, often receiving a substantial percentage of the amount charged. When the charges are placed on the bill without the consumer's authorization, it is known as "cramming."

The FTC's complaint alleges that in some cases, T-Mobile was charging consumers for services that had refund rates of up to 40 percent in a single month. 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 authorized by its customers. As the complaint notes, the refund rate likely significantly understates the percentage of consumers who were crammed. The complaint also states that internal company documents show that T-Mobile had received a high number of consumer complaints at least as early as 2012.

The FTC has made significant efforts to end mobile cramming. In the last year, in addition to holding a public workshop on mobile cramming, the Commission has filed several lawsuits against alleged mobile cramming operations Jesta Digital, Wise Media, and Tatto Inc.According to today's complaint, T-Mobile billed its customers for the services of these FTC defendants as well as an operation sued by the Texas Attorney General.

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.

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.

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.

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.

The FTC's complaint seeks a court order to permanently prevent T-Mobile from engaging in mobile cramming and to obtain refunds for consumers and disgorgement of T-Mobile's ill-gotten gains.

*  *  *

Consequences? A fed-funded fine? Cost of doing business we presume...

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Tue, 07/01/2014 - 14:29 | 4914573 fonzannoon
Tue, 07/01/2014 - 14:32 | 4914580 Dr. Engali
Dr. Engali's picture

Lol.... Too funny. The lines between the reality and the ridiculous get blurrier every day.

Tue, 07/01/2014 - 14:41 | 4914601 ZerOhead
ZerOhead's picture

This is nothing but another attack on American business innovation...

Tue, 07/01/2014 - 14:49 | 4914643 Headbanger
Headbanger's picture

Then God bless the hackers who are stealing services from them!

Tue, 07/01/2014 - 15:04 | 4914703 lordylord
lordylord's picture

At least there is an itemized list to wade through all the bullshit.  Just imagine if there was an itemized list from the IRS and the US government.  People would flip shit.

Tue, 07/01/2014 - 15:09 | 4914730 lordylord
lordylord's picture

Itemized tax bill for 2014:

1.  Lafaunda's abortion....$2.37

2.  Lebrauns cell phone....$0.50

3.  Bombing the shit out of innoncent people...$128.00

4.  TSA feeling up your junk...$4.12

...

Total...Your life, your liberty, your happiness.

 

Tue, 07/01/2014 - 15:22 | 4914778 Manthong
Manthong's picture

I'd use flag semaphore or fire and wet blankets before using T-Mobile again. 

I dumped them over 5 years ago.

Tue, 07/01/2014 - 15:23 | 4914804 kchrisc
kchrisc's picture

Planting a "Liberty Garden" over an arsenal: $97

Arsenal, ammo and guillotine: $2,659

Being prepared: Priceless.

 

Note: A "Liberty Garden" is planted over that which one is hiding from those who that which is being hidden is ultimately for.

Tue, 07/01/2014 - 15:02 | 4914705 ZerOhead
ZerOhead's picture

They'll need more than blessings with the 60,000 NSA agents hunting them down...

Tue, 07/01/2014 - 15:02 | 4914709 SethDealer
SethDealer's picture

AMEN

Tue, 07/01/2014 - 15:03 | 4914711 Ahmeexnal
Ahmeexnal's picture

Parasitic germans.

Third strike they´re out for good.

Come on Putin, destroy the arschkriegers.

Tue, 07/01/2014 - 14:49 | 4914647 WillyGroper
WillyGroper's picture

WTF Just T-Mobile? They all do it & they're all getting a cut. 

I don't care who your cxr is, what you need to do is put a 3rd party block on billing. If you don't use it, block texting too or just use AAPL to AAPL for free. My personal experience was after receiving/not replying to a text from Mobi-Bro, that started a $9.99 per mo billing cycle. Not bad pickins for auto bots texting thousands blocks of numbers. At one time texting was their biggest money maker. Kill the beast.

Tue, 07/01/2014 - 15:04 | 4914689 ZerOhead
ZerOhead's picture

... what you need to do is put a 3rd party block on billing...

Read the fine print... that now incurs an additional $50 per month charge...

Tue, 07/01/2014 - 15:14 | 4914761 WillyGroper
WillyGroper's picture

Not with my cxr it doesn't. Same goes for 3rd party billing on a landline & prison phone calls. What cxr? Show me & look it up in the tariff's, I believe that would be illegal not to mention start a mass exodus.

If they did start that, I'd go right back to a fruit jar & a string cuz it's just one more thing I can do without. 

Tue, 07/01/2014 - 15:05 | 4914722 Sudden Debt
Sudden Debt's picture

Never heard about it but i do remember blocking some of those things on my kids phones. Maybe I should also put in some kind of parent block on my phone :)

Tue, 07/01/2014 - 15:36 | 4914864 SF beatnik
SF beatnik's picture

I believe I've seen subtle trickery in bills I've gotten from AT&T, Virgin Mobile, and a car insurance company.

Since the Reagan era, there has more and more of this. Soon, businesses will have to cheat to be competitive. 

Tue, 07/01/2014 - 17:22 | 4915215 Dr. Venkman
Dr. Venkman's picture

Having a few friends that worked as sales people for T mobile and other cell phone cos (there is really high turnover for the independent stores) I would not be surprised if the sales people were gaming the system somehow by authorizing this. The incentives offered by the mobile cos. to the sales people are ridiculous and encourage graft. Not that I  doubt Tmobile would do this, however.

Tue, 07/01/2014 - 15:12 | 4914751 Shizzmoney
Shizzmoney's picture

The other day, The Onion had headline: "Brazil Government ensures that it will take World Cup profits to reinvest in country's infrastructure".  And *that* was the joke.  And it was pretty fucking funny because we ALL know where that money is going.

Thing is, The Onion had fallen off until recently; but now with these many headlines, all they have to do is print the truth and/or what is supposed to happen = comedy gold.  

Tue, 07/01/2014 - 14:53 | 4914664 JLee2027
JLee2027's picture

Had a similiar unathorized billing experience with T Moble years ago, and dropped them. Won't do business with companies like that.

Tue, 07/01/2014 - 16:22 | 4915044 SF beatnik
SF beatnik's picture

I try to do business with companies I trust.

Over the years, I've never been screwed by Trader Joe's, Walmart, Amazon dot com, or ebay dot com. 

 

Oh... and zenni optical, where I save a ton of money on eye glasses. A fine business.  (No, I don't work for zenni.  And I buy a lot of eye glasses. Three separate Rxs.  Reading, computer, and driving. Extra emergency pairs for each car.)

Tue, 07/01/2014 - 14:31 | 4914576 JustObserving
JustObserving's picture

NSA does not have enough dirt on Narendra Modi?  The new budget is due on July 10 and India may eliminate all the extra taxes on gold and silver.

Yellen will strongly disapprove.

Tue, 07/01/2014 - 14:44 | 4914608 rubiconsolutions
rubiconsolutions's picture

"Can you screw me now?"

 

Yeah, I know...that was Verizon but tumatah, tomato.

Tue, 07/01/2014 - 14:55 | 4914675 SethDealer
SethDealer's picture

Everything is a scam now. fuck AT&T and T mobile

Tue, 07/01/2014 - 15:06 | 4914724 NotApplicable
NotApplicable's picture

Well, thanks to Greenspanankellen, what other choice is there? Honest work simply cannot compete with the wealth transfer mechanism that is the Fed.

Tue, 07/01/2014 - 20:14 | 4915859 SamuelMaverick
SamuelMaverick's picture

T-Mobile = Lying theiving cocksuckers.

              I am so sick of companies scamming to steal money. It pisses me off even more when service resellers like straightalk can make tons of money being honest.

 

 

                                           Maverick

Tue, 07/01/2014 - 14:30 | 4914577 NOTaREALmerican
NOTaREALmerican's picture

Looks like more smart-n-savvy people scamming dumbasses for fun-n-profit. 

Tue, 07/01/2014 - 14:52 | 4914658 wakablahh
wakablahh's picture

So when TMobile is fined, where does the money go.. to the people duped into paying more or to the government?

Tue, 07/01/2014 - 14:56 | 4914677 NOTaREALmerican
NOTaREALmerican's picture

In the current version of the game we're playing all money goes to the smart-n-savvy people. 

Tue, 07/01/2014 - 15:12 | 4914748 Ness.
Ness.'s picture

The real smart and savvy people don't pay for mobile phones or the charges.  They don't pay for housing, food, cable or medical either.  

Tue, 07/01/2014 - 15:03 | 4914714 SethDealer
SethDealer's picture

the money always goes to the lawyers

Tue, 07/01/2014 - 14:35 | 4914586 Sudden Debt
Sudden Debt's picture

I have 32 euro's on my bill from such sms services that send me texts that I did not subscribe to, can't unsubscribe and even don't know what it is about
And guess what, I complained last week that I will not pay for it and they shut me down directly.
But off course, my subscription fees keep on going.
There's not that much I can do than to pay actually.
I noticed those bills on accident but when you look for example to your banking cost, I have about 107 euro's in service fees... What service?
And when you ask the detail, it's 10 cents there, 20 cents here, 15 cents there. How do you actually know what to do?
And I have 4 checking accounts so... All I can think of is that i never saw this!

Tue, 07/01/2014 - 14:47 | 4914626 ZerOhead
ZerOhead's picture

Somebody picks your pocket the old fashioned way and you catch them stealing they put them in jail.

A company picks a million pockets and you catch them... the most they will see is usually a small fine.

Tue, 07/01/2014 - 14:49 | 4914638 Sudden Debt
Sudden Debt's picture

And what can you do? Take a 5K lawyer for a 30 euro bill?

Tue, 07/01/2014 - 14:54 | 4914671 ZerOhead
ZerOhead's picture

That is precisely what the telecom's lawyers were laughing about over a 1,000 euro lunch when they came up with this idea...

Tue, 07/01/2014 - 14:53 | 4914665 ParkAveFlasher
ParkAveFlasher's picture

The Law Loves Inflation, The Law being simply a balloon of words.

Tue, 07/01/2014 - 15:36 | 4914839 kchrisc
kchrisc's picture

 

“As long as it is admitted that the law may be diverted from its true purpose--that it may violate property instead of protecting it--then everyone will want to participate in making the law, either to protect himself against plunder or to use it for plunder.”
? Frédéric Bastiat, The Law

The law is either an instrument of justice or an instrument of plunder. Never both.

Tue, 07/01/2014 - 17:13 | 4915186 what's that smell
what's that smell's picture

>>Somebody picks your pocket the old fashioned way and you catch them stealing they put them in jail.

>>A company picks a million pockets and you catch them... the most they will see is usually a small fine.

 dude! ayn the objective is sooooooooooo pissed at you!

get down on your hands and knees right now and beg peter schiff's forgiveness!

 

Tue, 07/01/2014 - 14:53 | 4914660 WillyGroper
WillyGroper's picture

Here's what you can do SuddenDebt

4914647

Tue, 07/01/2014 - 15:18 | 4914782 Sudden Debt
Sudden Debt's picture

Thx, I'm going to check it out

Tue, 07/01/2014 - 14:36 | 4914588 pcrs
pcrs's picture

Us gvt revenge for the German gvt sacking their Verizon spying agency.

Tue, 07/01/2014 - 14:48 | 4914612 JustObserving
JustObserving's picture
How T-Mobile Made Hundreds Of Millions Charging Customers For "Bogus" Services

Lying, thieving, stealing is now the preferred business model.  After all, the CEO needs his $10 million paycheck.

If I steal from you, and you do not notice, did it really happen?

Tue, 07/01/2014 - 14:45 | 4914617 SilverMoneyBags
SilverMoneyBags's picture

I hope the people who knew about this and looked the other way get fired. Pieces of shit.

Tue, 07/01/2014 - 14:50 | 4914646 NOTaREALmerican
NOTaREALmerican's picture

More likely they've already gotten bonuses and promotions.

Tue, 07/01/2014 - 14:45 | 4914618 alien-IQ
alien-IQ's picture

expect them to recicve a sternly worded letter followed by a fine most likely in the ball park of $250. That'll teach em.

Tue, 07/01/2014 - 14:46 | 4914619 Mi Naem
Mi Naem's picture

"heavy jail sentences and sever punishments" 

Whoa, whoa, whoa there!  What is this, Iran?!?

Tue, 07/01/2014 - 14:53 | 4914655 Jlasoon
Jlasoon's picture

Maybe we should export these executives to Vietnam. They know what to do with them. 

Tue, 07/01/2014 - 14:52 | 4914661 Disenchanted
Disenchanted's picture

I guess it all depends on which body parts are severed as punishment...

Tue, 07/01/2014 - 14:48 | 4914627 Madcow
Madcow's picture

if you're not cheating, you're not really trying 

Tue, 07/01/2014 - 15:25 | 4914812 ZerOhead
ZerOhead's picture

"If you're not cheating, you're not really trying "

Says everyone from Lance Armstrong to Jamie Dimon...

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