Agreement Reached with T-Mobile
AUSTIN, December 19, 2014 - The State of Texas, 49 states and the District of Columbia today announced the resolution of a multistate investigation into wireless carrier T-Mobile USA, Inc. for its role in the practice of unlawful cellphone “cramming” – the unlawful practice of placing unauthorized third-party charges on mobile phone accounts. Cramming occurs when third-party content providers enroll and bill mobile phone customers for their services – such as ringtones and recurring text messages containing trivia or horoscopes – without the customers’ knowledge or consent.
Widely recognized as a national leader in efforts to end cramming, the Internet and Privacy team of the Texas Attorney General’s Office served on the multistate coalition’s Executive Committee to investigate allegations that T-Mobile’s billing practices actually facilitated unscrupulous content providers’ mobile cramming. In addition to Texas, the Executive Committee team included attorneys general from Vermont, Florida, Maryland, Delaware, Washington and Oregon.
Under the agreement negotiated by Texas and the Executive Committee, T-Mobile agreed to settle the states’ claims for a total nationwide monetary value of at least $90 million – including $4.5 million to the Federal Communications Commission and $18 million to the states. Texas will receive nearly $1.06 million in payment. One third of Texas’s share will reimburse the State’s legal fees, with the remaining two-thirds of the funds disbursed as civil penalties pursuant to the Texas Deceptive Trade Practices Act.
As part of this legal action, T-Mobile has agreed to no longer bill for third-party Premium Short Message Services (PSMS) – which led to the unlawful cramming – and will be isolating other third-party billing charges on customer bills. In addition to allowing customers to more clearly see the remaining third-party charges on their bills, T-Mobile is also implementing a new system to ensure they obtain the express consent of customers prior to a purchase, and will also provide an electronic receipt to customers upon purchase.