“Today’s enforcement action demonstrates the Commission’s continuing commitment to work with our federal and state counterparts to protect consumers,” said FCC Chairman Tom Wheeler. “When consumers are harmed by carriers’ unscrupulous business practices, we will marshal our collective resources to seek accountability and obtain positive reforms. We are pleased to have partnered once again with the FTC and the attorneys general for all 50 states and the District of Columbia on a settlement that will bring meaningful relief to millions of consumers.”
“Yet again we are faced with a phone company that profited while its customers were fleeced by third parties who placed unauthorized charges on their phone bills,” said Travis LeBlanc, Chief of the FCC’s Enforcement Bureau. “And once again the FCC is standing up for those customers. Today’s settlement holds T-Mobile responsible for its billing practices and puts money directly back into the pockets of American consumers.”
The Enforcement Bureau launched its investigation after receiving consumer complaints alleging that T-Mobile customers were billed for unauthorized charges for subscriptions to third-party services that they did not request or authorize. These subscription charges were typically $9.99 per month. As T-Mobile customers inquired and learned about the third-party charges T-Mobile assessed on their bills, many complained that they did not authorize such charges, and sought refunds. In some instances, T-Mobile provided refunds, but there were numerous customers who were billed for unauthorized third-party charges and were not compensated.
Under the terms of the agreement the FCC announced today, T-Mobile has agreed to a $90 million settlement, including a minimum of $67.5 million to fund and operate a consumer redress program that will give refunds to victims of its unlawful cramming activities; if consumer claims exceed this amount, T-Mobile will continue to pay them. In addition, T-Mobile will pay $18 million to state governments participating in the settlement, and will make a $4.5 million penalty payment to the U.S. Treasury. The settlement was negotiated in coordination with the Federal Trade Commission and the attorneys general of all 50 states and the District of Columbia.
The FCC is also requiring T-Mobile to stop offering commercial third-party "premium SMS" charges, adopt processes to obtain express informed consent from customers prior to allowing third-party charges on their phone bills, revise their billing practices to ensure that third-party charges are clearly and conspicuously identified on bills so that customers can see what services they are paying for, and offer a free service for customers to block all third-party charges.
In October 2014, the FCC obtained a similar settlement from AT&T Mobility, who paid $105 million to resolve an investigation into unauthorized third-party subscriptions and premium text messaging.