So much for the uncarrier carrier. T-Mobile is being drawn into a court battle over allegedly charging customers in secret. You remember those tv spots about ringtones, horoscopes etc? That is what is at issue here. Customers were unwittingly charged additional fees even after they had opted out of the premium SMS services.
The FTC has already filed suit against the mobile carrier, and the FCC is opening an investigation into T-Mobile. Wow, someone forgot to send the lobbying check. I haven’t seen the FCC act this quickly in a long time. I wonder if T-Mobile had wrapped itself in a Comcast blanket, if they would have been fine?
Last year, T-Mobile joined with other carriers in stopping the charging of users premium fees for SMS services. There are plenty of horoscope apps if you need your Gemini fix. The FTC, while acknowledging the move, said that the carrier needs to refund customers for bogus charges.
How much money are we talking? It runs into the 100s of millions. That’s one way to juice an earnings report. The FTC had tried to settle out of court with the company, but hit a roadblock. Not the most surprising roadblock considering the leadership of T-Mobile.
Now, instead of offering customers money to switch to the carrier, it looks like the carrier will have to divert some of its earnings to a one-time charge to refund customers. The FTC says it still has to determine the amount that was collected, and how much is owed to each T-Mobile customer affected.
The news was a bearish one for the stock, which is down more than a percent on the day. We will see if it can buck the bad news and head higher on the day.