Attorney General J.B. Van Hollen Announces $90 Million Cramming Settlement with T-Mobile

Dec 19 2014
Attorney General J.B. Van Hollen Announces $90 Million Cramming Settlement with T-Mobile
 

MADISON — Attorney General J.B. Van Hollen announced today that his office, along with his counterparts in the other 49 States and the District of Columbia, the Federal Trade Commission and the Federal Communications Commission, have reached proposed settlements with T-Mobile USA, Inc. that will resolve allegations that T-Mobile placed charges for third-party services on consumers’ mobile telephone bills that the consumers did not authorize – a practice known as “cramming.”

 

T-Mobile is the second mobile telephone provider to enter into a nationwide settlement to resolve allegations regarding cramming.  Attorney General Van Hollen announced a similar, $105 million settlement with AT&T Mobility LLC in October of this year.  Like the previous settlement with AT&T, the proposed settlement imposes a comprehensive set of requirements on T-Mobile designed to address cramming problems, and requires T-Mobility to make payments, credits, and debt forgiveness amounting to at least $90 million. T-Mobile and AT&T were among the four major mobile carriers -- in addition to Verizon and Sprint -- that announced they would cease billing customers for commercial PSMS in the fall of 2013.

 

The Complaint filed today by the Wisconsin Department of Justice alleges that T-Mobile, until at least sometime in late 2013, charged many of its consumer customers for other services offered by third-party merchants that were unrelated to the mobile telephone services T-Mobile provides.  According to the Complaint, the charges involved monthly subscription fees, typically $9.99 per month, for content such as ringtones and wallpaper, and for third-party “premium” text message subscription services (“Premium Short Message Service” or “PSMS”) such as horoscopes, trivia and sports scores.  It further alleges that in numerous instances, T-Mobile placed charges on Wisconsin consumers’ mobile telephone bills for third-party services without the consumer’s knowledge and which the consumers did not order or authorize.  The Complaint alleges that billing consumers for consumer goods or services that the consumer has not agreed to purchase violates Wisconsin consumer protection law.  In addition to filing a Complaint, the Wisconsin Department of Justice has filed a proposed Consent Judgment for the Dane County Circuit Court’s consideration.

 

Under the terms of the settlements, T-Mobile has agreed to a consumer redress program that is set forth in the proposed Stipulated Order for Permanent Injunction and Monetary Judgment filed in Federal Trade Commission v. T-Mobile USA, Inc., (Case No. 2:14-cv-00967-JLR), which requires T-Mobile to provide full refunds to consumers who have been charged by T-Mobile for unauthorized commercial PSMS charges since June 1, 2010, who file a claim under T-Mobile’s Premium SMS Refund Program.  The settlement terms require that T-Mobile to make payments, credits, and debt forgiveness of no less than $90 million. The $90 million minimum payment includes $18 million that T-Mobile will pay to the States and $4.5 million to the Federal Communications Commission. Under the settlement, Wisconsin will receive $278,094.97, in addition to any amount received by Wisconsin consumers under the refund program.

 

Consumers can submit claims under the Program by visiting http://www.t-mobilerefund.com.  On that website, consumers can submit a claim, find information about refund eligibility and how to obtain a refund, and can request a free account summary that details PSMS purchases on their accounts.   Consumers who have questions about the Program can visit the Program website or call the Refund Administrator at (855) 382-6403.  

 

The settlement also requires T-Mobile to stop making available to consumers the option to purchase products or services through commercial PSMS -- the platform to which law enforcement agencies attribute the lion’s share of the mobile cramming problem.  T-Mobile must also take a number of steps designed to ensure that it only bills consumers for third-party charges that have been authorized, including the following:

-          Beginning no later than March 1, 2015, T-Mobile must obtain, or implement reasonable practices to confirm consumers’ express informed consent is appropriately collected and documented before a consumer is billed for any third-party charge;

-          Beginning no later than April 1, 2015, T-Mobile must implement a system where the consumer will be sent a purchase confirmation separate from the bill for every third-party charge that will appear on the consumer’s bill;

-          Beginning no later than April 1, 2015, T-Mobile must inform its customers, when they subscribe for services, that their mobile phone can be used to pay for third-party charges, and must inform consumers of how those third-party charges can be blocked if the consumer doesn’t want to use their phone as a payment method for third-party products; and

-          Beginning no later than April 1, 2015, T-Mobile must present third-party charges in a dedicated section of consumers’ mobile phone bills, must clearly distinguish them from T-Mobile charges, and must include in that same section information about the consumers’ ability to block third-party charges.

 

The State is represented by Assistant Attorney General Phillip D. Ferris.

Copies of the Complaint and Consent Judgment submitted to the Court are available at the following links:

 

Summons and Complaint

Consent Judgment