T-Mobile got involved in a recent controversy following an FTC claim that the company has hidden fees in phone bills specifically for its premium third-party texting services. As the claim implies, customers have been unknowingly paying for more without their knowledge emphasizing the company may have earned hundreds of millions with the hidden charges. FTC's claim about the company has also sparked concerns whether investors should be thinking twice about the company. On the consumer's part, this has also sparked inquiries whether it is safe to sign up for plans under the network.
According to Business Insider, FTC claimed that T-Mobile has been earning "hundreds of millions of dollars" via the hidden costs. The premium charges pertain to fees paid for services or applications like celebrity gossip, horoscopes and flirting tips. According to the report, customers pay around $9.99 monthly and the network continued charging despite issues about fraudulent charges. T-Mobile has been getting around 40% of the fees while the remaining gets allocated to the texting service. T-Mobile's CEO John Legere said in a public statement:
"We have seen the complaint filed today by the FTC and find it to be unfounded and without merit. In fact T-Mobile stopped billing for these Premium SMS services last year and launched a proactive program to provide full refunds for any customer that feels that they were charged for something they did not want. T-Mobile is fighting harder than any of the carriers to change the way the wireless industry operates and we are disappointed that the FTC has chosen to file this action against the most pro-consumer company in the industry rather than the real bad actors."
The Motley Fool raises some questions about the issue voicing out whether investors should be worried about the FTC claim. According to the report, FTC remains unconvinced about T-Mobile's coming clean including the refund program. When compared to other competitors, the Motley Fool also places T-Mobile as struggling between Sprint and AT&T. The market cap for T-Mobile is around 26.8 billion whereas AT&T's market cap is at 185 billion. Despite the controversy, T-Mobile has also started offering Wi-Fi calling for its iPhone offerings through iOS 8 beta 3 update.