Popular mobile company T-Mobile USA knowingly made hundreds of millions off its customers in bogus charges, a federal regulator alleged Tuesday in a complaint likely to damage the reputation of a household name in wireless communications, according to Reuters.
In its complaint filed in federal court, the Federal Trade Commission claimed T-Mobile billed consumers for subscriptions to premium text services such as $10-per-month horoscopes that were never authorized by the account holder, Reuters reported.
The practice is often referred to as "cramming": businesses stuff a customer's bill with bogus charges associated with a third party, according to Reuters. In this case, the FTC says T-Mobile should have realized that many of these premium text services were scams because of the high rate of customer complaints, but while as many as 40 percent of customers demanded refunds, others didn't notice the charges.
In many cases, customers never authorized the charges but were signed up without their knowledge, the commission said, Reuters reported. Separately, the Federal Communications Commission also announced it was investigating T-Mobile USA for cramming.
The FTC alleges that T-Mobile collected as much as 40 percent of the charges, even after being alerted by other customers that the subscriptions were scams, according to Reuters.
The FTC also alleged that T-Mobile USA was refunding to up 40 percent of some of the charges in a given month, which the agency said should have been a signal to the wireless company that the charges were fraudulent, Reuters reported.
"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 Chair Edith Ramirez, according to Reuters. "The FTC's goal is to ensure that T-Mobile repays all its customers for these crammed charges."
The FTC asked the court to order T-Mobile, which is the fourth-largest U.S. mobile phone provider by number of customers, to stop mobile cramming, to refund customers and to give up any revenues from the practice, Reuters reported.
