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FTC accuses T-Mobile of charging its customers for fraudulent cellphone spam

FTC accuses T-Mobile of charging its customers for fraudulent cellphone spam

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T-Mobile may claim that it always has its customers' best interests at heart, but the US government thinks otherwise. The FTC just filed a suit against the carrier alleging that it has been engaging in the practice of "cramming" its customers' bills with false charges. According to the FTC, T-Mobile commonly adds charges for "premium" SMS-based subscriptions for services like "flirting tips, horoscope information or celebrity gossip" that typically cost $9.99 per month. Furthermore, the FTC is claiming that T-Mobile did nothing to stop these charges for years after it signs showed the services were spam.

Lastly, the FTC says that the services in question had refund request rates of up to 40 percent in a single month — a fact that the FTC believes is clear evidence that consumers were not signing up for these services in the first place. Even when customers were granted refunds, the FTC claims that the carrier often didn't pay them back in full. The suit also alleges that T-Mobile commonly claimed that customers had authorized the charges without providing any proof. With T-Mobile allegedly collecting as much as 40 percent of the revenue generated from these services, the FTC decided it was time to put its foot down.

The FTC vs. the Uncarrier

"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 Chairwoman Edith Ramirez in a statement. "The FTC's goal is to ensure that T-Mobile repays all its customers for these crammed charges."

T-Mobile CEO John Legere responded to the FTC's suit with his typically brash rhetoric, calling the claims "unfounded and without merit." He went on to tout T-Mobile's status as the "uncarrier," saying that "we believe that customers should only pay for what they want and what they sign up for." Legere does admit that "not all of these third party providers acted responsibly — an issue the entire industry faced," but goes on to say that "the FTC's lawsuit seeking to hold T-Mobile responsible for their acts is not only factually and legally unfounded, but also misdirected."

The FTC has been trying to crack down on fraudulent cellphone charges in recent years — last year, it sued a company that appeared to be one of the providers of such spam services, and it also cracked down on a massive SMS spam campaign. It's not clear yet how T-Mobile will respond — or if the FTC will go after other carriers for similar practices.

Update, 4:30PM ET: This article was updated to include T-Mobile's resopnse to the FTC's suit.