Settlement Requires T-Mobile To Reform Business Practices, Provide Consumer Relief, And Make $500,000 Payment To New York State
NEW YORK – Attorney General Eric T. Schneiderman today announced a $90 million multi-state settlement with T-Mobile to resolve charges that the company engaged in cramming. Cramming is a practice where cell phone providers place unauthorized third-party charges on consumers’ bills. One common cramming charge is a $9.99-per-month premium text messaging subscription service (also known as PSMS) for horoscopes, trivia, sports scores or other information that consumers often never requested.
“Today’s settlement makes it clear that nobody is above the law, including large multinational corporations, and will provide relief to consumers across New York State,” said Attorney General Schneiderman. “When customers are billed for services they did not request, it picks the pockets of hard-working New Yorkers.”
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 consumers’ knowledge or consent. T-Mobile is the second mobile telephone provider to enter into a nationwide settlement to resolve allegations regarding cramming; Attorney General Schneiderman announced a similar, $105 million settlement with AT&T in October of this year. 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 settlement agreement requires the following:
- T-Mobile must only bill for third-party charges that have been authorized by consumers, improve how third-party charges appear on consumers’ mobile phone bills, better enable consumers to block the placement of third-party charges on their bills, and make it easier for consumers who are crammed to get relief;
- T-Mobile must provide full refunds to consumers charged for unauthorized PSMS charges paid after January 1, 2010, either in the form of a payment or as forgiveness of a debt, amounting no less than $67.5 million – it is estimated that nearly 700,000 New Yorkers are eligible for a refund;
- T-Mobile must pay the individual states a total of $18 million, including $515,673.54 to the State of New York; and
- T-Mobile must pay $4.5 million to the United States Treasury on behalf of the Federal Communications Commission.
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 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 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 the following:
- Obtain consumers’ express consent before billing consumers for third-party charges, and ensure that consumers are only charged for services if they have been informed of all material terms and conditions of their payment;
- Present third-party charges in a dedicated section of a consumer’s mobile phone bill so as to distinguish them from T-Mobile’s charges and include in that same section information about the consumer’s ability to block such charges;
- Inform consumers when they sign up for services that their mobile phone can be used to pay for third-party charges, and inform consumers how those third-party charges can be blocked if they don’t want to use their phone as a payment method for third-party products; and
- Give consumers an opportunity to obtain a full refund or credit when they are billed for unauthorized third-party charges.
Attorney General Eric Schneiderman’s Office partnered with the other 49 states attorneys general, the District of Columbia, the Federal Trade Commission, and the Federal Communications Commission on the case.
This case was handled by Assistant Attorney General Kate Matuschak of the Consumer Frauds and Protection Bureau. The Consumer Frauds and Protection Bureau is led by Bureau Chief Jane Azia. The Consumer Frauds and Protection Bureau is part of the Division of Economic Justice led by Executive Deputy Attorney General for Economic Justice Karla Sanchez.
