Attorney General Kamala D. Harris Announces Cramming Settlement With T-Mobile

LOS ANGELES – Attorney General Kamala D. Harris today announced that the California Department of Justice—along with the 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. to 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 “mobile cramming.” The state of California received $834,782 in the settlement.

“T-Mobile deceived its customers by adding unauthorized charges to their bills each month, in order to boost the company’s profits. This settlement puts an end to these bad business practices, refunds consumers and brings transparency to T-Mobile bills,” Attorney General Harris said.  “I encourage Californians who were victims of T-Mobile’s cramming practices to file a claim immediately.”

Under the settlement, T-Mobile must provide each victim of cramming who files a claim under its Premium SMS Refund Program an opportunity for a full refund.  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.  T-Mobile will also pay $18 million to the Attorneys General and $4.5 million to the Federal Communications Commission.

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 nationwide settlement to resolve allegations regarding cramming; Attorney General Harris announced a $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.

Consumers can submit claims under the Program by visiting http://www.t-mobilerefund.com.  On the 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 claims website or call the Refund Administrator at (855) 382-6403.

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 the following:

• T-Mobile must 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;
• T-Mobile must give consumers an opportunity to obtain a full refund or credit when they are billed for unauthorized third-party charges;
• T-Mobile must inform its customers when they sign up 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
• 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.