T-Mobile’s Reputation Could Take a Big Hit From FTC Allegations About Fake Fees

This is not good news for the mobile carrier.


T-Mobile has fashioned an entire marketing campaign around the benefits to customers for making the switch to their services, promising to pay up to $650 for any fees incurred for coming over to their side. So it’s especially damaging that the Federal Trade Commission is charging the mobile service provider with duping customers into paying fees they shouldn’t have been on the hook for.

In its complaint, the FTC says T-Mobile has made “hundreds of millions” of dollars charging customers for the ability to send “premium” text messages that they didn’t ask for. T-Mobile allegedly pocketed 35 to 40 percent of the $9.99 per month typically charged. This practice is called “cramming” and, back in November, according to CNET, carriers agreed to ban the practice. Moreover, T-Mobile has said that it will help customers recoup fees from third-party providers who charge for these services.

T-Mobile CEO John Legere has vehemently denied the charges in two different posts on the T-Mobile site, which have both been repeatedly tweeted out to his followers.

“We have seen the complaint filed today [Tuesday] by the FTC and find it to be unfounded and without merit,” begins the first message.

“As the Un-carrier, we believe that customers should only pay for what they want and what they sign up for. We exited this business late last year and announced an aggressive program to take care of customers, and we are disappointed that the FTC has instead chosen to file this sensationalized legal action,” it says later.

In the second message, Legere is much more aggressive, blaming lobbyists for the case.

“On Tuesday of this week, we all got to see Washington politics and the big carrier lobbyists at their best.  While I love our democracy, I hate the way D.C. works some times, and I just could not sit still and let them get away with it,” he writes in the second message.

Hey now… them’s are fighting words.

Legere is right to take a strong stance against these allegations. They cut to the heart of T-Mobile’s reputation; literally everything the company says it stands for. Anything that has the whiff of a scam is going to ruin the company’s ability to continue to market itself as the carrier that cares.

Legere also does a smart thing, acknowledging that T-Mobile, like other carriers, did once engage in this practice. Again, he focuses on its new practices aimed at benefiting customers.

“It’s wrong for a company like T-Mobile to profit from scams against its customers when there were clear warning signs the charges it was imposing were fraudulent,” Edith Ramirez, the FTC chairwoman has said in a statement.

While it’s important for Legere and the company to take a strong stance, the company should also be sure to come off like it’s cooperating with the investigation. If they have nothing to hide and it is, in fact, outside forces as Legere alleges, that will also come to light.

On top of that, there’s a big merger — between T-Mobile and Sprint — that the company won’t want to put in jeopardy. Not to mention the 1.3 million customers (by USA Today’s count) who switched over in the first quarter, presumably based on their belief that T-Mobile, with their consumer-friendly marketing message, can be trusted.

image via T-Mobile