Network carrier T-Mobile was last week charged with making hundreds of millions of dollars after ignoring a text scam known as ‘cramming’. The FTC accused the company of complicity in the scheme, which works by attaching unusual additional charges to mobile games and text message services. Such charges are added to monthly phone bills without user permission, and network carriers like T-Mobile frequently take a cut.
Crammers rely on the often-confusing nature of phone bills to sneak in extra charges, and wireless carriers play their part by allowing third-party charges to form part of a monthly bill. Cramming companies are known to have targeted T-Mobile subscribers, but the carrier continued to allow charges to be added even after indications of fraud emerged.
Typically, credit card companies investigate potential fraud if more than 1% of customers alert them to unauthorized charges and request a refund. The FTC claims up to 40% of customers who received charges asked for a refund.
Although a number of states have passed anti-cramming laws, the FTC remains the primary watchdog for consumer fraud. They recently reached a $10 million settlement with a group of companies responsible for a major cramming scheme, and last year saw Verizon settle a class action lawsuit by agreeing to refund every single cramming charge to customers who requested their money back.
The sting in the tail for T-Mobile is that their inaction is entirely at odds with their carefully constructed image as the consumer-friendly ‘un-carrier’. Positioning themselves as a more ethical alternative to their rivals, this sort of publicity is going to cause serious harm to T-Mobile’s brand.
The good news for consumers is that the cat’s out of the bag, and the four major American carriers – Big Red, AT&T, Sprint and T-Mobile – have all agreed to drop most forms of third-party text message billing charges. Cramming is no longer such an attractive proposition for scammers, who will have to look elsewhere to defraud consumers.
If you think you have been crammed, you should lodge a complaint with your carrier and with the FTC. The sooner you get the ball rolling on, the sooner you should get a refund. Similarly, if you have other queries about your phone bill, the FTC remains the best place to look for advice.