(Adds comment from T-Mobile, share price, paragraphs 6-8 and
By Diane Bartz
WASHINGTON, July 1 U.S. authorities filed a
complaint against T-Mobile USA on Tuesday, accusing the
wireless provider of adding millions of dollars of unauthorized
charges onto customers' bills, a practice known as "cramming."
The charges were for subscriptions for services like
horoscopes or celebrity gossip delivered by text message, which
often cost $9.99 a month. T-Mobile USA received 35 to 40 percent
of the amount charged, the Federal Trade Commission (FTC) said.
In many cases, customers never authorized the charges but
were signed up without their knowledge, the commission said.
The Federal Communications Commission also announced it was
investigating T-Mobile USA for cramming and said it would
coordinate with the FTC.
The FTC asked the court to order T-Mobile USA, the
fourth-largest U.S. mobile phone provider by number of
customers, to stop mobile cramming, provide refunds and give up
any revenues from the practice.
The company, which has a reputation as a price-cutter, said
in a statement that it had already stopped billing for the text
services. It announced on June 10 that it was reaching out to
"crammed" customers to tell them how to request a refund.
"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," Chief Executive Officer John
Legere said in an emailed statement.
Legere blamed the companies providing the text services for
the cramming. "We believe those providers should be held
accountable," he said, terming the FTC's lawsuit misdirected.
The FTC has previously gone after the smaller companies
that provide the flirting tips and other services delivered by
text but this is its first action against a wireless carrier for
"The FTC's goal is to ensure that T-Mobile repays all its
customers for these crammed charges," FTC Chairwoman Edith
Ramirez said in a statement.
"There were oodles of complaints," said Jessica Rich,
director of the FTC's Bureau of Consumer Protection. She said
the agency held settlement talks with T-Mobile but did not reach
Despite the lawsuit, the practice should be coming to an end
based on a pact that carriers T-Mobile USA, Verizon, AT&T
Mobility and Sprint, under pressure from 45 state
attorneys general, agreed to in November to stop billing
customers for third-party services.
The FTC also alleged that T-Mobile USA was deceptive in how
it billed customers, putting the crammed charges under a total
for "use charges" and "premium services" but never spelling out
that a portion of the charge was for third-party charges.
Further, T-Mobile USA frequently balked at providing
refunds, often urging customers to take their complaint to the
vendor, the FTC said.
T-Mobile USA shares closed at $33.41, down 21 cents or 0.6
The complaint was filed in the U.S. District Court for the
Western District of Washington.
(Reporting by Diane Bartz, additional reporting by Marina
Lopes, editing by Jim Loney, Eric Beech and Tom Brown)