The Regulatory Mix, TMI’s daily blog of regulatory activities, is a snapshot of PUC, FCC, legislative, and occasionally court, issues that our regulatory monitoring team uncovers each day. Depending on their significance, some items may be the subject of a TMI Regulatory Bulletin.
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The FCC announced an agreement with T-Mobile under which it will pay $90 million to settle investigations into allegations that the company billed customers millions of dollars in unauthorized third-party subscriptions and premium text messaging services. The settlement was negotiated in coordination with the Federal Trade Commission and the attorneys general of all 50 states and the District of Columbia. The $90 million settlement includes a minimum of $67.5 million to fund and operate a consumer redress program that will give refunds to victims of its unlawful cramming activities. If consumer claims exceed this amount, T-Mobile will continue to pay them. In addition, T-Mobile will pay $18 million to state governments participating in the settlement and will make a $4.5 million penalty payment to the U.S. Treasury.
The FCC’s investigation uncovered that T-Mobile charged its customers for some subscriptions with refund rates as high as 40% in a single month. In some instances, T-Mobile continued to assess subscription charges for a third-party merchant even after discontinuing one of that merchant’s other subscription offerings for improper authorization, learning about legal action against a merchant, or receiving an industry “alert” about a merchant’s failure to obtain valid consumer authorization for its subscription offerings.
Among other things, the Consent Decree with the FCC requires that T-Mobile no longer offer commercial third-party “premium SMS” charges, adopt processes to obtain express informed consent from customers prior to allowing third-party charges on their phone bills, revise their billing practices to ensure that third-party charges are clearly and conspicuously identified on bills so that customers can see what services they are paying for, and offer a free service for customers to block all third-party charges. The FCC also released a Consumer FAQs on the settlement.
Separately, the FTC released that Stipulated Order it entered into with T-Mobile containing essentially the same terms as the FCC Consent Decree.