Schuette Announces $90 Million National Settlement with T-Mobile for Cellphone ‘Cramming'

Contact: Joy Yearout 517-373-8060

 

December 19, 2014

 

LANSING, Mich. – Michigan Attorney General Bill Schuette today announced his Consumer Protection Division—along with attorneys general of the other 49 States and the District of Columbia, the Federal Trade Commission, and the Federal Communications Commission—reached settlements with T-Mobile USA, Inc. that include at least $90 million in payments, and that resolve allegations that T-Mobile placed charges for third-party services on consumers' mobile telephone bills that were not authorized by the consumer, a practice known as "cramming." 

 

"Consumers should never have to pay for services they have never requested," said Schuette. "We will continue to aggressively advocate for families across Michigan and ensure they are treated with the fairness they deserve."

Schuette notes his Consumer Protection Division has secured $349,000 from the sweeping national settlement, which will go to the Michigan General Fund. It is estimated that approximately 136,000 Michigan T-Mobile consumers incurred an un-refunded T-Mobile PSMS charge and may be eligible for refund under the restitution program.

Background on T-Mobile USA Alleged Cellphone Cramming

Consumers who have been "crammed" often complain about charges, typically $9.99 per month, for "premium" text message subscription services (also known as "PSMS" subscriptions) such as horoscopes, trivia, and sports scores, that the consumers have never heard of or requested.  The attorneys general and federal regulators allege that cramming occurred when T-Mobile placed charges from third parties on consumers' mobile telephone bills without the consumer's knowledge or consent.  T-Mobile is the second mobile telephone provider to enter into a national settlement to resolve allegations regarding cramming; Schuette announced a similar, $105 million settlement with AT&T in October 2014. 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.

How to Submit Claims

Under the terms of the settlements, T-Mobile must provide each victim of cramming who files a claim under its Premium SMS Refund Program an opportunity for a full refund. 

T-Mobile 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 terms require that T-Mobile pay at least $90 million; of this sum, at least $67.5 million must be paid to consumers—a portion of which may be paid by forgiving debts consumers may owe T-Mobile. 

Protecting Consumers Going Forward

The settlement requires T-Mobile to stay out of the commercial PSMS business—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:

  • Obtain consumers' express consent before billing consumers for third-party charges, and must ensure that consumers are only charged for services if the consumer has been informed of all material terms and conditions of their payment;

  • Give consumers an opportunity to obtain a full refund or credit when they are billed for unauthorized third-party charges;

  • Inform customers when they sign up for services 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,

  • 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

T-Mobile will also pay $18 million to the attorneys general and $4.5 million to the Federal Communications Commission. 

Schuette: Stay on Guard Against Unauthorized Cellphone Charges

"Always review cellphone bills thoroughly for charges that are unfamiliar or you don't understand," Schuette advises consumers.  "Ignoring small charges can add up to big amounts.  Some cramming charges can be as small as $2 or $3 per month and could be easy to miss.  Before paying suspicious charges, consult with your cellphone provider to be sure you are paying for services that you authorized; your bill statement should explain how to dispute errors."

 A.G. Schuette: Fighting for Michigan Consumers

Since 2011, Attorney General Schuette's Consumer Protection Division has collected more than $24 million in consumer refunds, cancelled debts, and civil penalties – the largest recovery recorded for any Michigan attorney general over a three-year period.  Schuette's office has also responded to more than 34,000 written consumer complaints through his consumer complaint mediation program.

Attorney General Schuette encourages victims of unfair, misleading, or deceptive business practices to contact the Department's Consumer Protection Division at 517-373-1140 or toll free at 877-765-8388.

To file a consumer complaint, Michigan residents can submit an online complaint form through the Attorney General's website at http://www.michigan.gov/AG or by mail to:

Michigan Attorney General Bill Schuette

Consumer Protection Division

P.O. Box 30213

Lansing, MI 48909

-30-