T-Mobile will be paying $90 million in refunds paid to customers over so-called “cramming” techniques which put bogus charges on customers’ bills to boost the bottom line of the company.
T-Mobile has reached a $90 million deal that will settle the massive lawsuit filed against the company by the Federal Trade Commission. However, customers receiving full-refunds will not be the only thing that T-Mobile customers can celebrate if the courts approve this settlement. T-Mobile will be forced to pay $18 million in fines and penalties, as well as $4.5 million to the Federal Communications Commission.
The Chairwoman of the FTC – Edith Ramirez remarked that “Mobile cramming is an issue that has affected millions of American consumers, and I’m pleased that this settlement will put money back in the hands of affected T-Mobile customers.” The refunding that T-Mobile will undergo will be under the watchful eye of the FTC as well. If the company fails to issue at least $90 million in refunds to consumers then the remaining balance, or the difference, will be returned to the FTC so they can refund customers the appropriate amounts.
The lawsuit that was filed against T-Mobile this summer was quite a shot against the company. The charges that appeared in customers’ bills were third-party charges, and would appear on monthly bills. At which point, when customers paid their bills – T-Mobile cashed in, and received 35-40% of each charge that was paid. The services that were associated with these third-party charges ranged from things like celebrity gossip, to love tips or even horoscope reminders. The typical charge that many T-Mobile users saw was $9.99 for some, or all of these features from third-party sources.
However, T-Mobile isn’t the first company to have a suit filed against them for this issue. In fact, it was just earlier this fall when AT&T came to terms with a $105 million settlement with the government over this very issue. In 2013, the four major mobile service providers agreed to stop billing customers for these services, like horoscopes, that were ultimately stemmed from third-party sources.
Interestingly, when the lawsuit against T-Mobile was first filed, the CEO of the company John Legere said on their site that the allegations were “unfounded and without merit,” but as the suit is settled, and the company pays out nearly $100 million – it would seem as though the allegations were anything but “unfounded and without merit.”