FTC Accuses T-Mobile of Cramming Bogus Text Fees Into Phone Bills

Federal regulators are accusing T-Mobile USA of collecting hundreds of millions of dollars from bogus SMS text services crammed onto phone bills.

T-Mobile allegedly billed customers for “premium” SMS text message subscriptions and received 35 percent to 40 percent of the $9.99 monthly fee. According to the lawsuit filed by the Federal Trade Commission in U.S. District Court today, T-Mobile buried the charges in bills that sometimes stretched more than 50 pages. The text fees were often for celebrity gossip, horoscope readings, or flirting tips, the agency said.

T-Mobile Chief Executive Officer John Legere says the FTC’s “sensationalized legal action” is unfounded and without merit. “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,” Legere said in a statement. He added that T-Mobile quit the premium text business in 2013 and had an “aggressive” program to refund customers’ money.

The charges date to 2009, according to the lawsuit, which says the wireless carrier should have suspected the fees were not authorized by customers because of the high rate of refund requests T-Mobile was receiving, as high as 40 percent some months. Other state and federal regulators have sought to eliminate such third-party subscription services in the telephone industry.

“Because these mystery fees are inconspicuously added to the bill, charges often go undetected for many months or even years, if they are detected at all,” the Federal Communications Commission says, estimating that as many as 20 million Americans each year have such charges on their phone bills.

    Before it's here, it's on the Bloomberg Terminal.