FTC goes after T-Mobile for ‘cramming’ text messages

The Federal Trade Commission has had enough with T-Mobile USA having its cake and eating it, too. The agency is taking the wireless carrier to court to prevent it from profiting from “cramming” by third-party firms that pad unauthorized and hard-to-detect monthly charges to customers’ cell phone bills.

The FTC’s lawsuit against T-Mobile USA is one of the most sweeping of its kind, according to The New York Times News Service. The Federal Communications Commission over the past several years has imposed anti-spamming rules and handed down $33 million in fines on various firms, an amount that represents under 1 percent of the $2 billion that cramming has collected from consumers.

T-Mobile USA officials have characterized FTC’s lawsuit as baseless and extreme. T-Mobile joined AT&T, Verizon and Sprint in banning third-party firms from charging through text messages, allowing only charitable or political donations. It also set up a refund program last month for customers who were impacted by unauthorized charges on their bills.

However, “T-Mobile’s remedies were not enough to satisfy the FTC, which has concluded that the carrier made hundreds of millions of dollars by taking a cut of revenue from the unauthorized charges,” according to The Times report.

Cramming has been a common practice on traditional phone lines – such as 900 numbers – but has only surfaced on mobile phones recently. The FCC said consumers have reported strange charges on their bills that are labeled “service charge,” “service fee,” “membership” or “other fees.”

Users unwittingly sign up for service they don’t want when they browse a web site with their smartphone and click on advertisement or other button that opts them into a service that delivers celebrity gossip, dating and weather tips through text messages. The consumers are then billed up to $9 per month for the service.

One of the safeguards that FCC has created was to require third-party vendors to ask users twice whether they want to make a purchase or sign up for a service.