T-Mobile will pay $90 million to settle "cramming" charges

December 20, 2014

U.S. carrier T-Mobile has settled charges levied by the FTC and FCC that they charged customers for unwanted services, a settlement that comes to the tune of at least $90 million. The practice, known as "cramming", stemmed from third-party services from "premium SMS" providers for wallpapers, ringtones, horoscopes, celebrity gossip, and more.

Said FCC Chairman Tom Wheeler:

"Cramming is a significant problem. For too long, millions of consumers have been scammed billed for bogus charges on their phone bills for services they didn't request. This is unacceptable. Today's settlement is a win for consumers who have been victimized by cramming. It means compensation for T-Mobile customers who were fraudulently billed for third-party services that they did not want or authorize. And it goes one step further. Today's action will also help protect all of T-Mobile's customers from bogus third-party charges in the future."

The $90 million penalty will be paid as restitution by T-Mobile. The charge for such services ranged up to $14/month, and was billed as non-descriptive strings of numbers and letters, obscuring what it was that the user was actually paying for. As you can imagine, the unknowing customer could see their bill seriously jacked up as a result.

T-Mobile stopped the practice back in 2013 and has agreed to honor all claims for refunds from customers. Of that $90 million, $18 million will go to the 50 US states (plus DC) participating in the settlement, and $4.5 million to the US Treasury. The rest is dedicated to resolving customer claims, though T-Mobile will pay more than that if necessary to refund all customers.

Source: FCC (1, 2)