T-Mobile's Legere accuses FTC of 'sensationalizing' premium SMS lawsuit

T-Mobile US (NYSE:TMUS) CEO John Legere fired back at the Federal Trade Commission, accusing the agency of "sensationalizing" a lawsuit it filed against the carrier for allegedly charging customers hundreds of millions of dollars for purported "premium" SMS subscriptions that, in many cases, customers never authorized.

"On Tuesday of this week, we all got to see Washington politics and the big carrier lobbyists at their best," Legere wrote in a company blog post late last week. "While I love our democracy, I hate the way D.C. works some times [sic], and I just could not sit still and let them get away with it." T-Mobile has made clear it will challenge the FTC's claims.

In the post, in which Legere used all-caps to get his points across, he wrote that "T-Mobile is NOT participating in any form of cramming, stuffing charges for un-purchased services, or trying to be anything less than totally transparent with each of our customers. PERIOD!"

However, the T-Mobile chief did acknowledge that from 2009 through 2013, "all of the big carriers in the wireless industry, including T-Mobile, began carrying what became known as the Premium SMS services. We were all billing for these services on behalf of the content providers who were responsible for obtaining the customers' authorizations. As we all know now, there were some fraudsters in that bunch. That is why, as we found them, we terminated them and, ultimately, made the decision in November 2013, as did all four of the wireless companies, to eliminate this from our service offerings."

The FTC claims that T-Mobile received anywhere from 35 to 40 percent of the total amount charged to consumers for subscriptions for content that included flirting tips, horoscope information or celebrity gossip that typically cost $9.99 per month. Such content generally is offered by third parties. The FTC further alleges that T-Mobile continued to bill some customers for the services years after becoming aware of signs that the charges were fraudulent.

The FTC declined to comment on Legere's post, according to Reuters.

Legere said that "despite the exaggeration of the FTC, this was neither a big nor important business for us, and their financial claims are incredibly overstated." He also noted, without naming any companies or providing evidence, that "those third-party content business operators are pretty much out of business."

He also wrote that "T-Mobile has in the past and will continue to keep our pledge to bill customers only for what they want and what they have purchased for as long as I am CEO of this company!  NO EXCUSES!"

Additionally, Legere pointed out that T-Mobile will launch a new program this month to proactively reach out to customers who were billed for premium SMS messages they received from third-party services to give them the opportunity to request a refund for any unauthorized charges. The program will run through September.

In November 2013, AT&T Mobility (NYSE: T), Sprint (NYSE: S) and T-Mobile entered into an agreement with 45 states to stop billing customers for premium SMS messages they receive. Verizon Wireless (NYSE: VZ) was not part of the settlement but said that it would also discontinue the practice. The carriers continue to support text-to-donate for charitable programs and text-to-contribute for political campaigns.

"We can't comment on other carriers," Jessica Rich, the FTC's consumer protection director said last week when asked if other carriers have engaged in practices similar to the ones the FTC is alleging T-Mobile engaged in. "I will say though that we have urged all of the industry to look at their practices and make improvements to prevent cramming."

For more:
- see this T-Mobile post
- see this Reuters article
- see this Washington Post article

Related Articles:
FTC: T-Mobile netted 'hundreds of millions of dollars' in fraudulent premium SMS charges
T-Mobile jogs customers' memories, reminds them about refunds for premium SMS
AT&T, Sprint, T-Mobile agree to stop billing for premium SMS messages
Two-thirds of mobile phone users get SMS spam
The pros and cons of marketing apps via SMS

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