Herring announces $90 million national settlement with T-Mobile

mark herringAttorney General Mark R. Herring announced today that he, along with the Attorneys General of the other 49 States and the District of Columbia, the Federal Trade Commission, and the Federal Communications Commission, have reached a $90 million settlement with T-Mobile USA, Inc. that resolves allegations that T-Mobile placed unauthorized charges for third-party services on consumers’ mobile telephone bills, a practice known as “cramming.”

More than 153,000 T-Mobile customers in Virginia may have been affected by cramming practices and may be eligible for restitution under the terms of this settlement. In addition to direct restitution to customers and an end to certain practices, the Commonwealth will receive approximately $321,000 to recover its costs and attorneys’ fees and to support future consumer protection efforts. T-Mobile is the second mobile telephone provider to enter into a nationwide settlement to resolve allegations regarding cramming, aftersimilar allegations against AT&T were settled in October for $105 million.

“Our announcement of a second mobile cramming settlement continues to send a clear message that deceptive billing practices will not be tolerated in Virginia,” Attorney General Herring said. “I am pleased that we were able to reach an agreement with T-Mobile that will provide direct refunds to Virginians and protect consumers from problematic billing practices in the future. I continue to encourage all Virginians to closely examine billing statements and the terms and conditions associated with any service to which they subscribe.”

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 their knowledge or consent. 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.

Under the terms of the settlement, T-Mobile must pay a minimum of $90 million. Of the minimum $90 million, 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 must further provide an opportunity for a full refund for each victim of cramming who files a claim under its Premium SMS Refund Program. T-Mobile also will pay $18 million to the Attorneys General and $4.5 million to 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 can 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 requires T-Mobile to stay out of the commercial PSMS business. PSMS is the platform to which law enforcement agencies attribute the lion’s share of the mobile cramming problem. T-Mobile also must 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 only are 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;
  • At the time the consumers sign up for services, T-Mobile must inform them that their mobile phone can be used to pay for third-party charges, and must inform customers 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.

The settlement, in the form of an Assurance of Voluntary Compliance, was filed with the Richmond City Circuit Court for approval.

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