Attorney General announces $90 million settlement with T-Mobile

Kentucky will receive $255,078.86

FRANKFORT, Ky. (Dec. 19, 2014) — Attorney General Jack Conway announced today that he joined the attorneys general of 49 other states and the District of Columbia, the Federal Trade Commission, and the Federal Communications Commission in reaching a settlement with T-Mobile USA, Inc.

major-verdicts-and-settlementsThe settlement includes at least $90 million in payments for consumer refunds and resolves allegations that T-Mobile engaged in “mobile cramming,” which is the placement of charges for third-party services on consumers’ mobile telephone bills that were not authorized by the consumer.

Consumers who have been victimized often complain about charges – typically $9.99 per month – for “premium” text message subscription services (PSMS) such as horoscopes, trivia, and sports scores, which 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 consumers’ knowledge or consent.

T-Mobile is the second mobile telephone provider to enter into a nationwide settlement to resolve allegations regarding cramming.

Conway announced a similar $105 million settlement with AT&T Mobility 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.

“We are working hard in the Office of the Attorney General to protect Kentucky consumers,” Attorney General Conway said. “Anyone who was affected by mobile cramming through T-Mobile should submit a claim through the company’s consumer refund program.”

Under the terms of the settlement, T-Mobile must provide each victim who files a claim under its PSMS Refund Program an opportunity for a full refund. The settlement terms require that T-Mobile pay at least $90 million. At least $67.5 million of this amount must be paid to consumers, a portion of which may be paid by forgiving debts consumers may owe to T-Mobile.  T-Mobile will also pay $18 million to the attorneys general and $4.5 million to the Federal Communications Commission. Kentucky will receive $255,078.86 for its participation in the settlement.

Consumers may submit claims by visiting http://www.t-mobilerefund.com.  Claims must be submitted by June 30, 2015.  On that website, consumers can submit a claim, find information about refund eligibility and how to obtain a refund, and may request a free account summary that details PSMS purchases on their accounts.  If you want a free account summary to support your refund claim, an account summary request form must be submitted by April 30, 2015. Consumers who have questions may visit the 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 a large 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 terms and conditions of their payments.
  • 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 may be used to pay for third-party charges and must inform them of how those third-party charges can be blocked if the consumer does not want to use their phone as a payment method for third-party products.
  • 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 third-party charges in the same section as information about the consumers’ ability to block third-party charges.
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