T-Mobile to Pay $90 Million to Settle Allegations of “Mobile Cramming”
Massachusetts to Receive $294,000 in Federal-State Settlement for Alleged Unauthorized Cellphone Charges
BOSTON – T-Mobile has agreed to pay $90 million pursuant to state and federal settlements over allegations that the company placed charges for third-party services on cellphone bills that had not been authorized by the consumer, a practice known as “mobile cramming,” Attorney General Martha Coakley announced today.
AG Coakley, along with 49 states and the District of Columbia, the U.S. Federal Trade Commission (FTC), and the Federal Communications Commission (FCC) reached settlements with T-Mobile file size 10MB valued at $90 million, resolving claims that consumers were “crammed” with additional charges, typically $9.99 per month, for “premium” short messaging services (PSMS), or text message subscription services such as horoscopes, trivia, and sports scores, that the consumers had never heard of or requested.
“Massachusetts consumers have been victimized for too long by this deceptive mobile cramming practice,” AG Coakley said. “Our office will continue to work with other states to hold companies accountable for these unauthorized charges and ensure that the mobile telephone industry has the right protections in place.”
The attorneys general and federal regulators allege that cramming occurred when T-Mobile placed charges on bills without the consumer’s knowledge or consent. In addition to Verizon, Sprint and AT&T Mobility, T-Mobile USA, Inc. was among the four major mobile carriers that announced in November 2013 it would cease billing their customers for commercial PSMS charges, and is the first mobile telephone provider to enter into a national settlement to resolve allegations regarding cramming. T-Mobile is the second mobile telephone provider to enter into a nation-wide settlement to resolve allegations regarding cramming. In October, AT&T agreed to pay $105 million over the cramming allegations.
Under the terms of the settlements, T-Mobile is required to provide a $67.5 million fund to repay consumers who were victims of cramming—a portion of which may be paid by forgiving debts consumers may owe T-Mobile. The fund will be administered by the FTC. T-Mobile also agreed to pay $18 million to the attorneys general and $4.5 million to the FCC. Massachusetts will receive more than $294,000.
Consumers can submit claims under the T-Mobile cramming refund program by visiting www.t-mobilerefund.com. If consumers are unsure about whether they are eligible for a refund, or have questions about the program, they can visit the claims website or contact the claims administrator at (855) 382-6403 for more information.
The settlement requires T-Mobile to stay out of the commercial PSMS business, the platform to which law enforcement agencies attribute the lion’s share of the mobile cramming problem. Additional terms require T-Mobile to take a number of steps designed to ensure that it only bills consumers for third-party charges that have been authorized, including the following:
- Obtain consumers’ express consent before billing consumers for third-party charges, and ensure that consumers are only charged for services if the consumer has been informed of all material terms and conditions of their payment;
- Give consumers an opportunity to obtain a full refund or credit when they are billed for unauthorized third-party charges;
- Inform its customers when they sign up for services that their mobile phone can be used to pay for third-party charges, and inform consumers of how those third-party charges can be blocked if the consumer doesn’t want to use their phone as a payment method for third-party products; and
- Present third-party charges in a dedicated section of consumers’ mobile phone bills, clearly distinguish them from T-Mobile’s charges, and include in that same section information about the consumers’ ability to block third-party charges.
In June 2013, AG Coakley along with 39 attorneys general sent comments to the FTC about putting an end to mobile cramming.
This matter was handled by Assistant Attorney General Mychii Snape and Deputy Chief David Monahan of Attorney General Coakley’s Consumer Protection Division.