John Legere says the FTC complaint is without merit

T-Mobile has raked in hundreds of millions of dollars by placing phony fees on customers' wireless bills, according to the Federal Trade Commission (FTC). 

The FTC filed a complaint Tuesday against T-Mobile for hiding bogus "premium" text message charges on customers' phone bills, and making a profit of about 35 to 40 percent of the total amount charged -- which amounted to hundreds of millions of dollars. 

The "premium" text messages -- which are typically in the form of a joke of the day, horoscope or love tips -- can cost around $9.99 a month. Many are offered by a third-party service, and T-Mobile gets a percentage of the charge.

The act of putting a charge on a customer's bill without their knowledge is called "cramming," and it's frowned upon in the wireless industry. In fact, the FTC launched its first lawsuit to end mobile phone bill cramming in April 2013. U.S. carriers agreed in November 2013 to ban companies from sending these kinds of premium messages.

"It's wrong for a company like T-Mobile to profit from scams against its customers when there were clear warning signs the charges it was imposing were fraudulent," said FTC Chairwoman Edith Ramirez. "The FTC's goal is to ensure that T-Mobile repays all its customers for these crammed charges."

The FTC is going after T-Mobile for not only placing fraudulent charges on customers' phone bills, but also making it rather difficult to find these third-party charges. For instance, the FTC said that T-Mobile would bury the charges in a 50-page bill under several different headings and abbreviate it as something like "8888906150BrnStorm23918" so that the customer couldn't easily find it. 

When customers were able to figure out that they were being slammed with bogus charges, T-Mobile allegedly failed to provide full refunds to some who requested it. 

The FTC said that because such a large number of customers were seeking refunds, it was an obvious sign to T-Mobile that the charges were never authorized by its customers. Internal company documents show that T-Mobile had received a high number of consumer complaints at least as early as 2012.

T-Mobile CEO John Legere has since responded to the FTC complaint, saying that it is "unfounded and without merit."

Here's Legere's full statement: 
We have seen the complaint filed today by the FTC and find it to be unfounded and without merit.  In fact T-Mobile stopped billing for these Premium SMS services last year and launched a proactive program to provide full refunds for any customer that feels that they were charged for something they did not want.  T-Mobile is fighting harder than any of the carriers to change the way the wireless industry operates and we are disappointed that the FTC has chosen to file this action against the most pro-consumer company in the industry rather than the real bad actors.
As the Un-carrier, we believe that customers should only pay for what they want and what they sign up for. We exited this business late last year, and announced an aggressive program to take care of customers and we are disappointed that the FTC has instead chosen to file this sensationalized legal action.  We are the first to take action for the consumer and I am calling for the entire industry to do the same.
This is about doing what is right for consumers and we put in place procedures to protect our customers from unauthorized charges. Unfortunately, not all of these third party providers acted responsibly—an issue the entire industry faced.  We believe those providers should be held accountable, and the FTC’s lawsuit seeking to hold T-Mobile responsible for their acts is not only factually and legally unfounded, but also misdirected. 

T-Mobile has been calling itself the "UnCarrier" for about a year or so now thanks to its efforts to end typical practices and overcharging by most wireless companies. For instance, T-Mobile offered a free unlimited international text and data plan in October 2013 and a "Get Out of Jail Free Card" that pays up to $350 per line in ETFs when switching from Verizon, AT&T or Sprint over to T-Mobile.  

It's hard to say if T-Mobile can continue to wave its UnCarrier flag, though, if the FTC's latest findings are true. 

Sources: PR Newswire, T-Mobile

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