FTC: T-Mobile ripped off customers with "bogus charges"

T-Mobile is said to have made hundred of millions in fees for premium services that no one ordered

Financial trends and news by Steven Loeb
July 1, 2014
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(Updated with comment from T-Mobile)

Last month, when T-Mobile CEO John Legere said that rivals AT&T and Verizon were "raping" their customers by over charging them, the comments seemed like more outrageous, and offensive, talk from a guy who is, frankly, known for being pretty over the top. It was easy to see what he meant, even if he put in the least elegant way possible.

Now, though, those comments seem bitterly ironic, because guess who is now being accused of doing that very same thing!

The Federal Trade Commission filed a complaint on Tuesday, accusing the mobile carrier of making hundreds of millions of dollars in "bogus charges."

According to the FTC, T-Mobile was putting charges for premium SMS subscriptions onto customer bills. Those premiums included flirting tips, horoscope information and celebrity gossip. Not only that, but the company is being accused of knowing about the scam for years, yet doing nothing.

Through third-party billing practices, in which a phone company places charges on a consumer’s bill for services offered by another company, T-Mobile apparently took anywhere between 35% to 40% of those charges.

By the way, in case you were wondering, the practice of putting such charges onto a customer's bill without first receiving authorization is known as “cramming.”

“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,” FTC Chairwoman Edith Ramirez said in a statement. “The FTC’s goal is to ensure that T-Mobile repays all its customers for these crammed charges.”

If you're wondering why the customers never noticed these charges, there's a good explanation for that. First of all, when was the last time you read your phone bill? Second, the FTC is accusing T-Mobile of making it "nearly impossible for consumers to find and understand third-party subscription charges" by making the bills over 50 pages long.

As for the many people who looked at their bills online, they could not even see the individual charges.

And, it gets even worse. Of course, as you'd imagine, some customers did actually realize that they were being charged for nonsense they never ordered, but T-Mobile is being accused of only giving out partial refunds for two months worth of charges. They even sometimes allegedly told customers to go directly to the scammers themselves, which would of course be extremely helpful, right? 

I dropped T-Mobile around 10 years ago because I found the service to be spotty and unreliable. Looks like I made a wise decision there. 


Legere has written a respondse to the allegations on the company's website. Here it is in full:

"We have seen the complaint filed today by the FTC and find it to be unfounded and without merit.  In fact T-Mobile stopped billing for these Premium SMS services last year and launched a proactive program to provide full refunds for any customer that feels that they were charged for something they did not want.  T-Mobile is fighting harder than any of the carriers to change the way the wireless industry operates and 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.

As the Un-carrier, we believe that customers should only pay for what they want and what they sign up for. We exited this business late last year, and announced an aggressive program to take care of customers and we are disappointed that the FTC has instead chosen to file this sensationalized legal action.  We are the first to take action for the consumer and I am calling for the entire industry to do the same.

This is about doing what is right for consumers and we put in place procedures to protect our customers from unauthorized charges. Unfortunately, not all of these third party providers acted responsibly—an issue the entire industry faced.  We believe those providers should be held accountable, and the FTC’s lawsuit seeking to hold T-Mobile responsible for their acts is not only factually and legally unfounded, but also misdirected."

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