T-Mobile US became the target of a federal investigation and lawsuit Tuesday amid allegations that it bilked potentially hundreds of millions of dollars from its customers in fraudulent charges. The announcement of a complaint filed in a court in Seattle by the Federal Trade Commission and an inquiry by the Federal Communications Commission is a blow to the reputation of the popular mobile phone provider, which had been making gains in the market by offering consumers flexible phone plans. The complaint alleges that T-Mobile billed consumers for subscriptions to premium text services such as $10-per-month horoscopes or updates on celebrity gossip that were never authorized by the account holder, a practice known as “cramming.” The FTC alleges that T-Mobile collected as much as 40 percent of the charges, even after being alerted by other customers that the subscriptions were scams. T-Mobile called the allegations "unfounded and without merit." The FCC announced it would launch a separate investigation, which could result in heavy fines for T-Mobile if it confirms the FTC's allegations.
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-The Associated Press and Reuters
First published July 1 2014, 12:08 PM