T-Mobile Makes $90 Million Settlement Over Wrongful Charges

December 22, 2014  |  

T-Mobile will have to dig into its deep pockets to settle state and federal investigations into the telecommunications giant’s alleged practice of mobile cramming. T-Mobile must pay at least $90 million.

According to the FCC, T-Mobile practiced “mobile cramming,” or placing unauthorized third-party charges on customers’ cellphone bills.

T-Mobile has to refund at least $67.5 million to customers affected by “mobile cramming” charges, as well as a $4.5 million penalty to the FCC and $18 million to the state attorneys general. California will receive $834,782, the most of any state, state Atty. Gen. Kamala Harris said.

“The FCC has recently cracked down on the practice, which mostly involves premium text message services, taking up seven separate enforcement actions against carriers this year,” reports The Los Angeles Times. The FCC sued T-Mobile in July.

Under the settlement, T-Mobile will also be required to set up a free service that allows its existing customers to block all third-party charges on their phone bills. And, T-Mobile also agreed to stop doing business with premium text message services, which typically cost $9.99 a month to deliver horoscopes, sports scores, and other information, often which consumers never requested or approved.

The charges have been confusing for customers, as some fees may be listed on bills as “service fee,” “voicemail,” or “calling plan.”

“Regulators say the carrier collected as much as 35 percent of the unauthorized charges paid by customers, and even charged third-party services $10 penalty fees for every refund request they received,” reports the Times.

This deal is the second-largest settlement by a wireless carrier because of allegations of mobile cramming. In October, AT&T made a $105 million settlement that included $80 million in consumer refunds. It settled to federal and state investigations that it illegally billed customers for unauthorized ringtone and other services.

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