FTC Targets T-Mobile in Cramming Suit

Earlier this month, the Federal Trade Commission (“FTC”) targeted mobile phone service provider T-Mobile, alleging that the company made hundreds of millions of dollars by allowing unauthorized charges to be placed on customers’ bills. According to the FTC, T-Mobile allowed third-party texting services to bill customers $9.99 per month to receive messages containing ringtones, horoscopes, flirting tips and the like. T-Mobile typically took about 40% of the transaction, the FTC says. When third party charges are placed on a customer’s bill, the process is known as “cramming.” Last December, in its first cramming case, the FTC reached a settlement with multiple third-party companies accused of issuing the charges. The agency said T-Mobile billed its customers for the services of these defendants. Jessica Rich, director of the FTC’s Bureau of Consumer Protection, said, “Getting consumers’ consent before charging them is as basic a consumer protection as you’ll find, whether you’re dealing with a brick and mortar store or with a mobile payment provider.”