T-Mobile's customers urged to look closely for unauthorized fees

Attendees cheer at a T-Mobile US Inc. event at the Paramount Theatre in Seattle on June 18. Federal regulators have accused T-Mobile of wrongly charging customers for some services.
Attendees cheer at a T-Mobile US Inc. event at the Paramount Theatre in Seattle on June 18. Federal regulators have accused T-Mobile of wrongly charging customers for some services.

WASHINGTON -- Federal regulators are urging consumers to go through their phone bills line by line after they accused T-Mobile US on Tuesday of wrongly charging customers for premium services, such as horoscope texts and quirky ringtones, the customers never authorized.

The Federal Trade Commission is suing T-Mobile in a federal court in Seattle with the goal of making sure every unfairly charged customer sees a full refund. The lawsuit, the first of its kind against a mobile provider, is the result of months of stalled negotiations with T-Mobile, which said it is already offering refunds.

"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," FTC Chairman Edith Ramirez in a statement.

The practice is called "cramming": A third party stuffs a customer's bill with bogus charges such as $10-per-month horoscopes or updates on celebrity gossip. In this case, the FTC said, T-Mobile was working with third-party vendors being investigated by regulators and known to be the subject of numerous customer complaints. T-Mobile then made it difficult for customers to notice the added charges and pocketed up to 40 percent of the total, according to the FTC.

In a statement, T-Mobile called the allegations "unfounded and without merit" and said it blames the third-party vendors for the erroneous charges. T-Mobile also said it is already reaching out to customers to provide refunds.

The Federal Communications Commission says it has started a separate inquiry into allegations that T-Mobile potentially made hundreds of millions of dollars in fraudulent charges.

"T-Mobile is fighting harder than any of the carriers to change the way the wireless industry operates, and we are disappointed that the FTC has chosen to file this action against the most pro-consumer company in the industry rather than the real bad actors," said John Legere, the company's chief executive officer, in a statement.

The FTC told reporters during a conference call Tuesday that it had been in negotiations with T-Mobile for months in an attempt to guarantee refunds would be provided to customers but that the two sides couldn't reach an agreement.

T-Mobile appears to have been laying the groundwork to head off the federal complaint. In November, the company announced that it would no longer allow premium text services because they were waning in popularity and not all vendors had acted responsibly. In June, it announced that it would reach out to consumers to provide refunds. But the FTC says that in many cases, the refunds are only partial and T-Mobile often refers customer complaints to the third-party vendors.

The FTC said consumers can file a complaint with the FTC if they believe they were victimized. They also can prevent fraudulent charges in the first place by asking their providers to block all third-party businesses from providing services on their phones.

Consumers would have had a hard time figuring out that they were being charged by T-Mobile for the services, the FTC said, because the company's online billing statements did not show that the charge was coming from a third party or that it was a recurring payment. Its full-length bills, which often run to dozens of pages, gave more information, but in what was often unintelligible fashion, the agency said.

T-Mobile US Inc. is a publicly traded company. It's headquarters are in Bellevue, Wash. T-Mobile's stock fell 6 cents to close Tuesday at $33.35.

Information for this article was contributed by Anick Jesdanun of The Associated Press and by Edward Wyatt and Brian X. Chen of The New York Times.

Business on 07/03/2014

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