T-Mobile Customers Potentially Overcharged Millions (NYSE:PCS)

T-Mobile has been accused of overbilling its customers hundreds of millions of dollars in charges for services the customers never requested. The Federal Trade Commission claims that T-Mobile earned millions of dollars by taking a cut of the revenue for these services, often as much as 35 to 40 percent of each $9.99 monthly charge. The F.T.C. is seeking refunds for consumers and seeking to permanently prevent T-Mobile from engaging in the overbilling practices that led to the complaints.

The Federal Communications Commission also launched an investigation after receiving numerous complaints from T-Mobile customers. At issue is the charges T-Mobile added to the cellphone bills of many customers for third-party services, typically texting services that send daily texts for things like horoscopes, celebrity gossip, or jokes. Regulators believe that T-Mobile was aware that the charges were fraudulent, yet continued to bill customers and take their cut of the revenue generated.

In many of the cases reviewed, the consumers claimed that they never ordered the premium texting services. Many of the customers were unaware that they were being charged for the services because T-Mobile’s online billing statements didn’t list that the charge was a recurring payment or that it originated from a third party. Customers with prepaid phone plans simply had the amount deducted from their accounts. During the investigation, T-Mobile claimed that consumers had authorized the charges, but could provide no proof of customers doing so.

In a statement, John Legere, T-Mobile’s chief executive, said that the F.T.C.’s accusations were without merit. However, T-Mobile stopped allowing third-party companies to impose charges on their customers last year and announced it would offer refunds to customers last month. Previously, refunds were only given to about 40 percent of the customers who asked for them.

The case against T-Mobile is one of the largest brought against a major telecommunications company for unauthorized billing practices. In the last four years, the F.C.C. have levied more than $33 million in proposed fines through nine enforcement actions against companies that engaged in similar practices.