Who profits from cramming? FTC challenges T-Mobile's role in bogus billing

The Federal Trade Commission accused T-Mobile of making hundreds of millions of dollars by charging mobile phone customers for "premium" SMS subscriptions that, in many cases, the consumers never authorized.

It was an all-too-common occurrence. People’s mobile phone bills included unexplained -- and unauthorized -- monthly charges. It’s called cramming and the Federal Trade Commission has brought a series of cases against companies that had fees for ringtones, horoscopes, “love tips,” etc., placed on cell phone bills without consumers’ consent. The crammers took a chunk of the cash, but you might be surprised to learn who the FTC says pocketed a 35-40% piece of the action.

A just-filed lawsuit pulls back the curtain on the role the FTC alleges that mobile phone carrier T-Mobile USA played in deceptive and unfair billing. Furthermore, according to the complaint, T-Mobile didn’t respond well to consumer complaints. In many cases, the company flat-out refused to give refunds for unauthorized charges or offered only partial refunds.

Count I of the lawsuit alleges that T-Mobile violated Section 5 of the FTC Act by making deceptive representations about charges on consumers’ phone bills. Count II focuses on allegedly unfair billing practices. What's the FTC asking for? A court order to prevent T-Mobile from engaging in mobile cramming, refunds for consumers, and disgorgement of T-Mobile’s ill-gotten gains.