FTC Targets Cramming Practices
On July 1, 2014, the Federal Trade Commission (“FTC”) filed a complaint alleging that cell phone service provider T-Mobile USA, Inc. (“T-Mobile”) made hundreds of millions of dollars through a practice known as “cramming.”
Cramming is the process of placing charges on consumer cell phone bills for premium text message subscriptions that are often illegitimate or the product of unfair and deceptive marketing. “These purported services have included monthly subscriptions for content such as ringtones, wallpaper, and text messages providing horoscopes, flirting tips, celebrity gossip, and other similar information,” according to the FTC’s complaint.
The FTC explains that “[c]ramming charges can be small, say $2 or $3, and easy to overlook. But even when the phony charges aren’t small, they may sound like fees you do owe. That makes them tough to pick out, especially if your phone bill varies month to month.”
In its complaint against T-Mobile, the FTC alleges:
“Defendant has continued to charge consumers for Third- Party subscriptions even after large numbers of consumers complained about unauthorized charges. Refund rates for the subscriptions were high – in some cases as high as 40%. Further, Defendant has continued to charge consumers for Third-Party Subscriptions even after industry auditor alerts, law enforcement and other legal actions, and news articles indicated that the third-party merchants were not obtaining valid authorization from consumers for the charges.”
In addition to the FTC’s action, Spokane law firm The Scott Law Group, P.S., along with Seattle law firm Terrell Marshall Law Group PLLC, have filed a class action lawsuit against M-Qube, Inc. and Mobile Messenger, Inc. for unfairly and deceptively charging Washington consumers for similar premium text messaging services.
The complaint alleges that M-Qube and Mobile Messenger have designed and implemented an unfair and deceptive scheme that causes Washington consumers to become unknowingly and unwittingly enrolled in and then charged unauthorized fees for text message subscription services.
Many consumers may have unknowingly signed up for text message subscriptions by entering a phone number into deceptive websites purportedly offering such services as trivia games, auctions, horoscope readings or IQ tests. Other consumers may have never entered a phone number into a website but have nevertheless been charged. Associated services or companies that may appear along with the fraudulent charges on consumers’ phone bills include Ringtone/Auction, MQube, ClickGen, CommuniKate, POW Mobile and WebDirect.
According to the allegations in the complaint, M-Qube and Mobile Messenger have charged hundreds of thousands of dollars in unauthorized fees to Washington consumers who have accounts with wireless providers such as AT&T, Verizon, Sprint, and T-Mobile.
The case, which was filed in October, 2012, is pending in the United States District Court for the Western District of Washington. The complaint seeks an injunction that will prevent M-Qube and Mobile Messenger from continuing to bill Washington residents for unauthorized charges. The complaint also seeks monetary damages.
If you have received a charge on your cell phone bill identifying any of the services or companies listed above and would like to speak with an attorney about this litigation, please contact one of the lead attorneys on the case: