T-Mobile Settles Cramming Case for $90 Million

SEATTLE (The Seattle Times/TNS) -

T-Mobile has agreed to pay at least $90 million to settle an investigation into allegations that the Bellevue, Wash., company billed customers millions of dollars in unauthorized third-party subscriptions and premium text-messaging services — a practice known as cramming.

Under the agreement, T-Mobile will pay at least $67.5 million in restitution to customers around the country. If consumer claims exceed that amount, T-Mobile will be responsible for paying all of them.

In addition to the full refunds, T-Mobile will have to pay $18 million in fines and penalties to the attorneys general of all 50 states and the District of Columbia and $4.5 million to the Federal Communications Commission to be paid to the U.S. Treasury.

The Federal Trade Commission filed a lawsuit against T-Mobile in July, alleging the company placed millions of dollars in unwanted third-party charges on its customers’ mobile-phone bills, receiving 35 to 40 percent of every charge they placed. The charges were for services like horoscopes and news tidbits, for which T-Mobile typically billed consumers $9.99 per month.

Since January, the FCC has taken seven enforcement actions against carriers for alleged cramming and similar violations. The most recent action was in October against AT&T, which paid $105 million.

Last week, the Consumer Financial Protection Bureau, working with the FCC, filed a lawsuit against Sprint for cramming.