T-Mobile will pay out $90 million in a massive settlement over the company’s involvement in “cramming” practices, following months of legal wrangling with the Federal Trade Commission and states’ Attorneys General. The settlement stems from so-called premium SMS providers charging wireless subscribers for services they didn’t want by adding a fee to their wireless bill.
Premium SMS providers would send users snippets of information in text form, like daily horoscopes or weather reports, and then add a charge for that service to a user’s phone bill. At times, they’d sign people up without informing them of the charge for such services, leading to these lawsuits.
“I will not tolerate deceptive billing practices,” Washington State Attorney General Bob Ferguson said. “My office will hold any company accountable that tries to hide unauthorized charges in the fine print of a consumer’s bill.”
According to T-Mobile’s internal investigation, the settlement could affect more than 230,000 of the company’s customers in Washington. The company will have to pay out at least $67.5 million in restitution to affected consumers around the U.S., whether in the form of refunds or debt forgiveness. In addition, T-Mobile will pay $18 million to state governments for cost recovery stemming from investigation by their Attorneys General, and $4.5 million to the Federal Communications Commission.
The settlement comes 5 months after T-Mobile was initially sued by the FTC over cramming. It’s been a big month for cramming suits – AT&T will pay out $105 million in a cramming settlement, while Sprint has just been hit with a suit of its own this week and could also be on the hook for $105 million.
T-Mobile has had an interesting time with the federal government this week – the FCC just announced that it will provide guidance on how it evaluates the reasonableness of data roaming charges, providing smaller carriers like T-Mobile a framework they can use to bring complaints against larger competitors over data roaming pricing.