washington: T-Mobile USA agreed to pay $90m to resolve federal and state claims that it charged consumers for extra services without authorisation, a practice known as “cramming” that has become a target of regulators.
The fourth-largest US wireless carrier, a Deutsche Telekom AG unit, was accused by the federal government and all 50 states of tacking on third-party charges not requested by customers, such as $9.99-a-month premium text message subscriptions for horoscopes, celebrity gossip and sports scores. AT&T Inc. agreed in October to pay $105m to resolve similar allegations. US officials said this week that regulators were planning to seek the same penalty from Sprint Corp.
“When consumers are harmed by carriers’ unscrupulous business practices, we will marshal our collective resources to seek accountability and obtain positive reforms,” Tom Wheeler, chairman of the Federal Communications Commission, said today in a statement.
The settlement, which also resolves claims by the Federal Trade Commission and the District of Columbia, will bring “meaningful relief to millions of consumers,” Wheeler said.
Timothy O’Regan, a T-Mobile spokesman, didn’t immediately respond to an e-mail seeking comment on the settlement.
As part of the deal revealed today, Bellevue, Washington- based T-Mobile must pay $67.5 million in refunds to consumers, $18mn to states and $4.5m to the US Treasury, according to officials. “Today’s settlement makes it clear that nobody is above the law, including large multinational corporations,” New York Attorney General Eric Schneiderman said in a statement. “When customers are billed for services they did not request, it picks the pockets of hard-working New Yorkers.”
The FTC sued T-Mobile in July and alleged that it billed consumers for the unrequested services until at least December 2013, making hundreds of millions of dollars from its cut of the extra fees. Rather than being clearly broken out, the third- party charges were lumped under the generic term “usage charges” on customers’ bills, according to the agency’s complaint filed in federal court in Seattle.Bloomberg
