T-Mobile US continued to fight back against allegations made this week by the Federal Trade Commission that the carrier had profited by providing billing services for what turned out to be fraudulent premium messaging services.
In a blog post, T-Mobile US CEO John Legere hinted that the FTC’s actions were prompted by lobbying efforts from the carrier’s rivals and that monetary claims made by the FTC were “incredibly overstated.”
“On Tuesday of this week, we all got to see Washington politics and the big carrier lobbyists at their best,” Legere started. “While I love our democracy, I hate the way D.C. works some times, and I just could not sit still and let them get away with it.”
Legere went on to claim that the FTC “did a great job sensationalizing their story and their news at the expense of both T-Mobile’s reputation and mine,” and that he could not sit aside and not respond.
“My frontline employees are upset about it and so am I,” Legere added. “I considered leaving it alone, but I have to set the record straight.”
Legere explained that indeed, T-Mobile US between 2009 and last year did provide billing services for premium messaging companies, a practice known as billing on behalf of and one done by a number of operators looking to profit from the rise in over-the-top services. Legere noted that those premium messaging companies were the ones responsible for gaining approval from T-Mobile US’ customers in order to bill for the services, which is where the fraudulent controversy comes in.
“As we all know now, there were some fraudsters in that bunch,” Legere explained. “That is why, as we found them, we terminated them and, ultimately, made the decision in November 2013, as did all four of the wireless companies, to eliminate this from our service offerings.”
T-Mobile US announced last month that it would begin reaching out to customers that may have been incorrectly charged for third-party, premium messaging services that the carrier used to allow access to through its billing platform.
The FTC claimed that some of the premium messaging services had refund rates as high as 40%, which should have been “an obvious sign to T-Mobile that the charges were never authorized by its customers,” and that internal documents showed such the carrier had received a “high number of consumer complaints at least as early as 2012.”
The FTC claims the complexity of wireless billing was also alleged to have helped T-Mobile US cover up the charges, with the FTC noting:
“When consumers viewed a summary of their T-Mobile bill online … it did not show consumers that they were being charged by a third party, or that the charge was part of a recurring subscription. The heading under which the charges would be listed, ‘Premium Services,’ could only be seen after clicking on a separate heading called ‘Use Charges.’ Even after clicking, though, consumers still could not see the individual charges.”
More damaging for T-Mobile US, the FTC said that once notified by customers about the fraudulent charges, T-Mobile US “in many cases failed to provide consumers with full refunds. Indeed, the FTC charged that T-Mobile refused refunds to some customers, offering only partial refunds of two months’ worth of the charges to others, and in other cases instructed consumers to seek refunds directly from the scammers – without providing accurate contact information to do so.”
In addition, the FTC said that in some cases T-Mobile US claimed consumers had authorized the charges despite not having proof of such authorization.
As for the monetary aspect, the FTC claim states that wireless operators received up to 40% of such charges that typically cost up to $10 per month, and raked in “hundreds of millions of dollars” from the practice.
Legere countered that by stating: “Despite the exaggeration of the FTC, this was neither a big nor important business for us, and their financial claims are incredibly overstated. Additionally, those third-party content business operators are pretty much out of business.”
This issue could continue to have legs as the Federal Communications Commission has said it was investigating the complaint, noting that T-Mobile US subscribers had filed similar complaints of unwanted charges “included billing for ringtones, wallpapers and text message subscriptions to services providing horoscopes, flirting tips and celebrity gossip.”
“Consumers should not be charged for services that they did not order,” said Travis LeBlanc, acting chief the FCC’s Enforcement Bureau, in a statement. “We will coordinate our investigation with the FTC, and use our independent enforcement authority to ensure a thorough, swift and just resolution of the numerous complaints against T-Mobile.”
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