T-MOBILE SETTLES CRAMMING CASE WITH FTC AND WILL PAY MINIMUM $90 MILLION

FROM:  U.S. FEDERAL TRADE COMMISSION 
T-Mobile to Pay At Least $90 Million, Including Full Consumer Refunds To Settle FTC Mobile Cramming Case
Settlement Requires Company To Pay Fines to States and FCC

T-Mobile has agreed to fully refund its customers for unwanted third-party charges it placed on their phone bills, a practice known as mobile cramming, paying at least $90 million to settle a Federal Trade Commission lawsuit filed earlier this year.

In addition to the full refunds T-Mobile is providing, which will resolve the FTC’s lawsuit if approved by the court, T-Mobile is paying $18 million in fines and penalties to the attorneys general of all 50 states and the District of Columbia and $4.5 million to the Federal Communications Commission.

“Mobile cramming is an issue that has affected millions of American consumers, and I’m pleased that this settlement will put money back in the hands of affected T-Mobile customers,” said FTC Chairwoman Edith Ramirez. “Consumers should be able to trust that their mobile phone bills reflect the charges they authorized and nothing more.”

Under the terms of the settlement, T-Mobile will be required to offer full refunds to all affected consumers. The amount of money the company pays must reach at least $90 million in redress or other payments. Should the company fail to do so, the balance must be remitted to the FTC for additional consumer redress, consumer education, or other uses. The settlement requires T-Mobile to contact all of its crammed customers – current and former – to inform them of the refund program and claims process, and to do so in a clear and conspicuous way.

The FTC filed suit against T-Mobile in July, alleging that the company placed millions of dollars in unwanted third-party charges on its customers’ mobile phone bills, receiving 35 to 40 percent of every charge they placed. The charges were for services like horoscopes, love tips and celebrity gossip, for which T-Mobile typically billed consumers $9.99 per month.

The FTC’s complaint alleges that in some cases, T-Mobile was charging consumers for services that had refund rates of up to 40 percent in a single month. The FTC has alleged that because such a large number of people were seeking refunds, it was an obvious sign to T-Mobile that the charges were never authorized by its customers.

According to the FTC’s July complaint, T-Mobile’s phone bills made it nearly impossible for consumers to find and understand third-party subscription charges. The FTC’s complaint against T-Mobile noted that in many instances information about the third-party charges crammed on to customers’ bills was buried deep in phone bills that totaled more than 50 pages in length.

In addition to requiring T-Mobile to provide consumers with full refunds, the settlement requires the company to get consumers’ express informed consent before placing third-party charges on their bills. The company also must ensure that consumers are notified of any third-party charges on their bills and provide them with information about the option to block third-party charges.

The FTC has brought numerous cases related to mobile cramming in recent months, taking action against mobile carriers and the third parties who place unauthorized charges.

The Commission vote approving the proposed stipulated order was 5-0. It is subject to court approval. The FTC filed the proposed stipulated order in the U.S. District Court for the Western District of Washington.

NOTE: Stipulated orders have the force of law when approved and signed by the District Court judge.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them.The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.

PRESIDENT OBAMA'S STATEMENT ON NET NEUTRALITY

FROM:  THE WHITE HOUSE 
November 10, 2014
Statement by the President on Net Neutrality

An open Internet is essential to the American economy, and increasingly to our very way of life.  By lowering the cost of launching a new idea, igniting new political movements, and bringing communities closer together, it has been one of the most significant democratizing influences the world has ever known.

“Net neutrality” has been built into the fabric of the Internet since its creation — but it is also a principle that we cannot take for granted.  We cannot allow Internet service providers (ISPs) to restrict the best access or to pick winners and losers in the online marketplace for services and ideas.  That is why today, I am asking the Federal Communications Commission (FCC) to answer the call of almost 4 million public comments, and implement the strongest possible rules to protect net neutrality.

When I was a candidate for this office, I made clear my commitment to a free and open Internet, and my commitment remains as strong as ever.  Four years ago, the FCC tried to implement rules that would protect net neutrality with little to no impact on the telecommunications companies that make important investments in our economy.  After the rules were challenged, the court reviewing the rules agreed with the FCC that net neutrality was essential for preserving an environment that encourages new investment in the network, new online services and content, and everything else that makes up the Internet as we now know it.  Unfortunately, the court ultimately struck down the rules — not because it disagreed with the need to protect net neutrality, but because it believed the FCC had taken the wrong legal approach.

The FCC is an independent agency, and ultimately this decision is theirs alone.  I believe the FCC should create a new set of rules protecting net neutrality and ensuring that neither the cable company nor the phone company will be able to act as a gatekeeper, restricting what you can do or see online.  The rules I am asking for are simple, common-sense steps that reflect the Internet you and I use every day, and that some ISPs already observe.  These bright-line rules include:

No blocking.  If a consumer requests access to a website or service, and the content is legal, your ISP should not be permitted to block it.  That way, every player — not just those commercially affiliated with an ISP — gets a fair shot at your business.

No throttling.  Nor should ISPs be able to intentionally slow down some content or speed up others — through a process often called “throttling” — based on the type of service or your ISP’s preferences.

Increased transparency.  The connection between consumers and ISPs — the so-called “last mile” — is not the only place some sites might get special treatment.  So, I am also asking the FCC to make full use of the transparency authorities the court recently upheld, and if necessary to apply net neutrality rules to points of interconnection between the ISP and the rest of the Internet.

No paid prioritization.  Simply put: No service should be stuck in a “slow lane” because it does not pay a fee.  That kind of gatekeeping would undermine the level playing field essential to the Internet’s growth.  So, as I have before, I am asking for an explicit ban on paid prioritization and any other restriction that has a similar effect.

If carefully designed, these rules should not create any undue burden for ISPs, and can have clear, monitored exceptions for reasonable network management and for specialized services such as dedicated, mission-critical networks serving a hospital.  But combined, these rules mean everything for preserving the Internet’s openness.

The rules also have to reflect the way people use the Internet today, which increasingly means on a mobile device.  I believe the FCC should make these rules fully applicable to mobile broadband as well, while recognizing the special challenges that come with managing wireless networks.

To be current, these rules must also build on the lessons of the past.  For almost a century, our law has recognized that companies who connect you to the world have special obligations not to exploit the monopoly they enjoy over access in and out of your home or business.  That is why a phone call from a customer of one phone company can reliably reach a customer of a different one, and why you will not be penalized solely for calling someone who is using another provider.  It is common sense that the same philosophy should guide any service that is based on the transmission of information — whether a phone call, or a packet of data.

So the time has come for the FCC to recognize that broadband service is of the same importance and must carry the same obligations as so many of the other vital services do.  To do that, I believe the FCC should reclassify consumer broadband service under Title II of the Telecommunications Act — while at the same time forbearing from rate regulation and other provisions less relevant to broadband services.  This is a basic acknowledgment of the services ISPs provide to American homes and businesses, and the straightforward obligations necessary to ensure the network works for everyone — not just one or two companies.

Investment in wired and wireless networks has supported jobs and made America the center of a vibrant ecosystem of digital devices, apps, and platforms that fuel growth and expand opportunity. Importantly, network investment remained strong under the previous net neutrality regime, before it was struck down by the court; in fact, the court agreed that protecting net neutrality helps foster more investment and innovation.  If the FCC appropriately forbears from the Title II regulations that are not needed to implement the principles above — principles that most ISPs have followed for years — it will help ensure new rules are consistent with incentives for further investment in the infrastructure of the Internet.

The Internet has been one of the greatest gifts our economy — and our society — has ever known.  The FCC was chartered to promote competition, innovation, and investment in our networks.  In service of that mission, there is no higher calling than protecting an open, accessible, and free Internet.  I thank the Commissioners for having served this cause with distinction and integrity, and I respectfully ask them to adopt the policies I have outlined here, to preserve this technology’s promise for today, and future generations to come.

WHITE HOUSE STATEMENT ON NET NEUTRALITY

FROM:  THE WHITE HOUSE 

Statement by the Press Secretary on Net Neutrality

The President has made clear since he was a candidate that he strongly supports net neutrality and an open Internet.  As he has said, the Internet’s incredible equality – of data, content, and access to the consumer – is what has powered extraordinary economic growth and made it possible for once-tiny sites like eBay or Amazon to compete with brick and mortar behemoths.

The FCC is an independent agency, and we will carefully review their proposal. The FCC’s efforts were dealt a real challenge by the Court of Appeals in January, but Chairman Wheeler has said his goal is to preserve an open Internet, and we are pleased to see that he is keeping all options on the table. We will be watching closely as the process moves forward in hopes that the final rule stays true to the spirit of net neutrality.

The President is looking at every way to protect a free and open Internet, and will consider any option that might make sense.

THREE PEOPLE ACCUSED OF DEFRAUDING U.S. GOVERNMENT OF $32 MILLION

FROM:  FEDERAL COMMUNICATIONS COMMISSION 
Thursday, April 10, 2014
Three Men Charged with Allegedly Defrauding the FCC of Approximately $32 Million

Three individuals have been indicted for their alleged roles in an approximately $32 million fraud against a Federal Communications Commission (FCC) program designed to provide discounted telephone services to low-income customers.

The charges were announced today by Acting Assistant Attorney General David A. O’Neil of the Justice Department’s Criminal Division, Assistant Director in Charge Valerie Parlave of the FBI’s Washington Field Office, Inspector General David L. Hunt of the FCC Office of Inspector General (FCC-OIG) and Chief Richard Weber of the Internal Revenue Service – Criminal Investigation (IRS-CI).

Thomas E. Biddix, 44, of Melbourne, Fla., Kevin Brian Cox, 38, of Arlington, Tenn., and Leonard I. Solt, 49, of Land O’Lakes, Fla., were charged by a criminal indictment returned on April 9, 2014, and unsealed today in federal court in Tampa, Fla.   The indictment charges the three defendants with one count of conspiracy to commit wire fraud and 15 substantive counts of wire fraud, false claims and money laundering.   The court also authorized a seizure warrant seeking the defendants’ ill-gotten gains, including the contents of multiple bank accounts, a yacht and several luxury automobiles.

As alleged in the indictment, the defendants engaged in a scheme to submit false claims with the federal Lifeline Program administered by the Universal Service Administrative Company, a not-for-profit corporation designated and authorized by the FCC.   The program aims to provide affordable, nationwide telephone service to all Americans through discounted phone service for qualifying low-income customers.

The indictment alleges that the defendants owned and operated Associated Telecommunications Management Services LLC (ATMS), a holding company that owned and operated multiple subsidiary telephone companies that participated in the Lifeline Program.   Biddix, chairman of the board at ATMS, and Cox and Solt allegedly caused the submission of falsely inflated claims to the Lifeline Program between September 2009 and March 2011 that resulted in ATMS fraudulently receiving more than $32 million.

The investigation has been conducted by the FBI, FCC-OIG, and IRS-CI.   The United States Marshals Service provided assistance coordinating the seizures of assets.

The case is being prosecuted by Trial Attorneys Andrew H. Warren and Kyle Maurer of the Criminal Division’s Fraud Section, with assistance from Darrin McCullough of the Criminal Division’s Asset Forfeiture and Money Laundering Section, and the United States Attorney’s Offices for the District of Columbia, the Western District of Tennessee and the Middle District of Florida.

The charges contained in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.