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T-Mobile Settles Government "Cramming" Charges for $90 Million

Most of the money will be returned to subscribers who paid bogus and unauthorized SMS charges.

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T-Mobile settled a Federal Trade Commission lawsuit that accused the company of profiting from unauthorized charges placed on subscriber bills for $90 million, government officials announced Friday.

The FTC sued T-Mobile in July, accusing the company of allowing third parties to “cram” consumers, or place unwanted charges on their bills. The charges were usually for things like horoscope or celebrity gossip text messages.

At least $90 million will be returned to subscribers who can show that they had to pay the unauthorized charges, which includes $22.5 million in fines that T-Mobile will pay to the states and Federal Communications Commission for the violations. As part of the settlement, T-Mobile will be required to contact all current and former customers who paid the unauthorized charges to let them know about the company’s refund program.

“Consumers should be able to trust that their mobile phone bills reflect the charges they authorized and nothing more,” FTC Chairwoman Edith Ramirez said in a statement.

T-Mobile CEO John Legere had previously said that the FTC’s charges were “unfounded and without merit.” A company spokesman wasn’t immediately available for comment about the settlement.

The FTC and other consumer protection agencies have spent much of the year investigating wireless carriers over the practice, which all four major carriers ended last December. Earlier this week, the Consumer Financial Protection Bureau sued Sprint over similar cramming charges; the FCC is preparing a $105 million fine against the carrier.

AT&T settled a similar FTC complaint for $105 million in October. Verizon remains the only carrier that hasn’t yet been either hit with a lawsuit over cramming allegations or announced a settlement. Neither the FTC nor the CFPB would comment on whether they are investigating Verizon.

But FCC officials hinted earlier this week that they were continuing to investigate carriers about cramming complaints. FCC Chairman Tom Wheeler said in a statement Friday that the T-Mobile settlement showed that “when consumers are harmed by carriers’ unscrupulous business practices, we will marshal our collective resources to seek accountability and obtain positive reforms.”

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