T-Mobile US has reacted angrily to an accusation by the Federal Trade Commission that it knowingly charged customers for unauthorised SMS services.
The practice, known as 'cramming', sees an operator place charges for unsolicited subscriptions to premium-rate text messages on its subscribers' phone bills – examples include horoscopes, celebrity gossip and facts about cats. Unauthorised services like these typically cost around $10 per month, the FTC said, and the operator often receives a substantial share of the charges.
In a complaint filed on Tuesday with a district court in Washington State, the FTC alleged that T-Mobile made hundreds of millions of dollars from cramming, and that it continued to charge customers even after it was made aware that the services were unsolicited.
"It's wrong for a company like T-Mobile to profit from scams against its customers when there were clear warning signs the charges it was imposing were fraudulent," said FTC chairwoman Edith Ramirez. "The FTC's goal is to ensure that T-Mobile repays all its customers for these crammed charges."
T-Mobile CEO John Legere staunchly defended his company, claiming that it stopped billing for premium texts last year and launched a programme to refund customers who had been charged for a service they didn't want.
In a statement on T-Mobile's Website, he claimed the FTC's complaint was "unfounded and without merit".
As usual though, Legere used Twitter to add some colour to the proceedings.
"Did the FTC just wake up? I've made it clear cramming is bad. Customers only pay for what they want at T-Mobile," he said, adding in a later missive that the complaint "looks like lobbying work of big greedy carriers".
Nevertheless, the FTC alleges that T-Mobile's billing practices made it difficult for customers to detect that they were being charged for premium SMS subscriptions.
"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 watchdog said. Instead, customers had to click through to a separate section called "Usage Charges", but even then the charges were not itemised.
In addition, the FTC said