Sprint and T-Mobile nearing merger agreement

T-Mobile and Sprint, respectively the third and fourth largest wireless carriers in the U.S., are nearing a merger agreement, undisclosed sources told Reuters Friday. A due diligence period would follow the finalization of the agreement’s terms, but the companies expect a deal by October, according to Reuters’ source.

In August, Reuters says, Sprint CEO Marcelo Claure said an announcement regarding merger talks would come in “the near future.”

The merger proposal would be the first one “with significant antitrust risk” to be submitted to the Federal Trade Commission since President Donald Trump took office, Reuters notes. The President was elected on a platform that included the deregulation of the business environment.

Mayoshi Son, the founder of Japanese venture capital firm SoftBank, which controls the Sprint Corporation, met with Trump in late December, just after the former tycoon won the election.

Son found Trump’s business policy potentially favorable for SoftBank, and promised to invest $50 billion in the U.S. economy and to create 50,000 jobs.

A merger proposal would evince Son’s confidence that the regulatory environment has become laxer since Sprint and T-Mobile abandoned a merger proposal in 2014 amidst pressure from the FTC.

Indeed, the FTC might be more receptive to a transformative merger in the telecom industry now than it was three years ago. Earlier this year, Reuters says, FTC Chairman Ajit Pai said “effective competition [exists] in the marketplace for mobile wireless services.” Thursday, the agency will vote on whether to submit Pai’s report on the state of competition in the wireless services market to the U.S. Congress, which requires such a report annually.

But, the terms of the new merger will likely be less advantageous for Son and Sprint than those reached in 2014. Under the previous deal, Sprint would have controlled the combined company, while T-Mobile’s parent company, Deutsche Telecom, would have become a minority shareholder.

Over the past three years, though, T-Mobile has outperformed Sprint. Accordingly, the terms of the new agreement will likely flip, Reuters’ source said. Deutsche Telecom and T-Mobile stockholders would own a majority of the combined enterprise, while SoftBank and the rest of Sprint’s shareholders would have a minority stake.

T-Mobile CEO John Legere, who took the reins in 2012 and has guided the company’s surge, will likely run the combined company.

The merged enterprise would have 130 million subscribers, Reuters notes, making it the United States’ third-largest wireless carrier, behind AT&T, which had 136.5 million subscribers as of July, and Verizon, which reported 147.2 million subscribers that same month.

Sprint’s market cap of approximately $34 billion, combined with T-Mobile’s $53 billion figure, would give the new company a value of around $87 billion. AT&T’s market cap is about $237 billion; Verizon’s exceeds $205 billion.

Sprint reported annual revenue of $33.3 billion for fiscal 2016, which ended March 31. T-Mobile posted $37.2 billion in annual revenue for calendar 2016. So, the combined company would likely generate over $70 billion annually.

Verizon posted consolidated revenues of $126 billion and wireless revenues of $89.2 billion in 2016. AT&T’s figure came in at $163 billion.

Analysts say the Sprint/T-Mobile merger provides ample opportunity to cut expenses as well.

In their bid for regulatory approval, the companies will likely emphasize that the combined company would create jobs by making investments in the development of 5G, the next generation of mobile internet connectivity.

But the merger will also precipitate layoffs as the new company consolidates its corporate structure, Roger Entner of Recon Analytics told Reuters.

According to Reuters, Sprint briefly pursued a merger with Charter Communications earlier this year.

The FTC continues to review another potential consolidation in the industry: AT&T’s proposed $85.4-billion acquisition of Time Warner.

Sprint shares jumped six percent Friday; T-Mobile stock rose 1.06 percent.

Walgreens to revise proposal to buy over 2,000 Rite Aid stores

In yet another effort to appease the Federal Trade Commission (FTC), U.S. pharmacy chain Walgreens will likely revise its June proposal to acquire 2,186 individual Rite Aid stores for $5.18 billion, sources told Bloomberg Monday.

Walgreens’ announcement could come early this week, the sources said.

The two chains have been pursuing a deal for almost two years, but the three proposals they have submitted thus far have met resistance from the FTC. In October 2015, Walgreens proposed an outright takeover of Rite-Aid. Under that deal, the former company would have purchased the latter for $9 per share—that amounts to a total of $9.4 billion.

Walgreens offer represented a 48 percent premium on Rite Aid’s closing price on October 26, the day before the proposal was announced.

The FTC reportedly worried that Walgreens’ purchase of Rite Aid would compromise competition.

A report by the Drug Channels Institute indicates that at the close of 2016, Walgreens controlled 13.8 percent of the U.S. prescription market, in terms of revenue. Under five percent of that market belonged to Rite Aid. The takeover would have given the combined company 18.4 percent of the market.

CVS, the nation’s largest pharmacy chain in terms of revenue, holds 23.4 percent of the prescription market.

This January, in response to the FTC’s concerns, Walgreens revised the price per share to between $6.50 and $7—putting the total value of the purchase between $6.84 billion and $7.37 billion—and pledged to sell as many as 1,200 of its newly acquired Rite Aid stores (about a quarter of the 4,600 or so Rite Aid locations Walgreens would have acquired) to Fred’s, a regional pharmacy chain.

In June, amidst continued skepticism from the FTC, Walgreens took a different tack. Rather than taking over Rite Aid, Walgreens proposed buying 2,186 individual Rite Aid stores—roughly 48 percent of the total number of Rite Aids—for a total of $5.18 billion, leaving Rite Aid to operate as a stand-alone entity.

Because it abandoned the original takeover plan, Walgreens was obligated to pay Rite Aid a termination fee of $325 million in addition to the purchase price.

Rite Aid stock plunged about 30 percent on news of the abandoned takeover, Fortune notes.

The Fortune piece casts doubt on whether the FTC was set to block the merger, citing a CTFN report that in turn cites antitrust lawyers and a former DOJ official as saying in late June that the FTC was “more likely than not” to approve the deal.

Prior to the companies’ withdrawal of the proposal, the FTC had taken no action to block the agreement. Following the withdrawal, Fortune says, the FTC released a statement calling the companies’ action “voluntary” and saying it came before the companies “would have been free to close their transaction absent Commission action.”

But, Walgreens Chief Executive Officer Stefano Pessina implies that he amended the deal in the face of regulatory pressure

“This deal [the one announced in June] is much simpler,” said per Bloomberg, of the June proposal. “It is an asset deal so it is less controversial.”

The FTC has allegedly frowned upon that deal as well, so Walgreens is set to amend its proposal for the fourth time. Sources told Bloomberg the “number of stores involved in the deal would not change dramatically” (Bloomberg’s paraphrasing).

The deadline by which the FTC was required to complete its review of the June proposal is nearing, Bloomberg notes. When that deadline arrives, the agency will either approve the deal or request additional information.

If Walgreens submits a revised plan prior to the deadline, though, the FTC would have 30 more days to consider that new proposal, and investigation of the previous one would end.

Rite Aid shares jumped 3.8 percent to a two-and-a-half-year high Monday on news that Walgreens was considering revising the deal. Walgreens surged in early trading but quickly modulated. At the market’s close, the company’s shares had risen marginally (0.12 percent).

Featured image via Wikimedia Commons

FTC approves Amazon’s acquisition of Whole Foods

Wednesday, the Federal Trade Commission (FTC) signed off on Amazon’s purchase of Whole Foods, The Washington Post reports. The $13.7 billion deal, which Amazon announced in June, is scheduled to take effect by the end of the year.

The FTC said in a statement that it had examined the “proposed acquisition to determine whether it substantially lessened competition.”

The deal would give Amazon 2% of the US grocery market, according to the Post. Walmart, which is among Amazon’s fiercest competitors in the grocery space and elsewhere, holds 20% of the market; Kroger has 7%.

Last year, Walmart generated $200 billion in revenue via grocery sales, the Post says. Kroger reported $115.3 billion worth of revenue in 2016. Whole Foods’ annual revenue approaches $16 billion.

“Based on our investigation,” the FTC says, “we have decided not to pursue this matter further.”

According to the Post, some have called upon regulators to amend antitrust laws to accommodate a corporate climate in which companies like Facebook, Google, and Amazon continue to grow.

The Post notes that the approval of the merger is the FTC’s first major action since President Trump took office in January. Trump has accused the eCommerce behemoth of shirking its taxes, fostering speculation that he might push the FTC to block the deal.

“Amazon is doing great damage to tax paying retailers,” Trump wrote on Twitter August 16. “Towns, cities and states throughout the U.S. are being hurt — many jobs being lost!”

Per the Post, Amazon reported paying $412 million in income taxes last year, $273 million in 2015, and $177 million in 2014. Though many states do not levy sales taxes on online retail transactions, Amazon collects sales tax in states where it is required to do so.

Whole Foods shareholders approved the acquisition earlier Wednesday. It is by far Amazon’s largest takeover to date, the Post reports.

In 2009, Amazon acquired online shoe retailer Zappos for $1.2 billion, and in 2014 the Seattle-based giant snatched up video game streaming site Twitch.

With the Whole Foods deal, Amazon, which has been closing in on brick-and-mortar commerce with services like Instant Pickup and PrimeNow, will enter a grocery sector that is struggling to keep up with changes in the ways consumers buy food. Over the last three years, the Post says, almost 20 grocers have filed for bankruptcy, largely because online food delivery services like FreshDirect are capturing an increasing share of the market.

Amazon has not disclosed its plans for Whole Foods as yet, but some have speculated that the tech company intends to build an online food delivery operation of unprecedented scale.

There are also whispers that Amazon will integrate Whole Foods into Instant Pickup. Customers could order groceries on their way to the store, then pick up their food as they walked in the door. Amazon could also use some or all of Whole Foods’ 460 brick-and-mortar stores as Instant Pickup warehouses and pickup centers.

Some warn that the takeover may jeopardize Whole Foods’ employees. As Amazon increasingly embraces automation and potentially looks to change the manner in which Whole Foods operates, staffing needs could change, leading to layoffs and personnel turnover.

“Amazon’s acquisition is a threat to Whole Foods workers and their families,” Marc Perrone, president of The United Food and Commercial Workers International Union, wrote in a letter to Whole Foods executives, per the Post. “They deserve a clear commitment from the entire board that their jobs, wages, and benefits will be protected from Amazon’s automated business model.”

John Mackey co-founded Whole Foods in Austin, TX in 1980, and remains its CEO today. The grocery chain is renowned for its favorable compensation and treatment of employees, most of whom earn more than minimum wage and benefits, according to the Post.

“Whole Foods Market has been satisfying, delighting and nourishing customers for nearly four decades — they’re doing an amazing job and we want that to continue,” Amazon CEO Jeff Bezos said in a statement in June.

Featured image via Flickr/Mike Mozart

Uber settles with FTC, agrees to 20-years of audits

Uber capitulated to a settlement with the Federal Trade Commission (FTC) early this week, agreeing to submit to two decades worth of audits.

The San Francisco-based company will need to implement a privacy program and submit to audits every 2 years for the next 20 years, reports ET Tech. The settlement follows an intense probe from US regulators concerned that Uber has “failed to protect the personal information of drivers and passengers and deceived the public about efforts to prevent snooping by its employees.”

The agreed terms are to ensure the company meets certain FTC requirements.

ET Tech reports the FTC Acting Chairman Maureen Ohlhausen had the following to say in regards to the settlement with Uber: “Our order requires a culture of privacy sensitivity for Uber. It’s going to make them take privacy into account every day.”

Uber’s privacy woes with the government began in 2014. The FTC first began its probe into Uber three years ago after media reports unveiled “God View.” Uber employees used “God View” to monitor their customers’ real-time locations after using the app to hail a ride.

Uber was quick to defend itself after the media firestorm that “God View” unleashed. In 2015, the company claimed it had a “strict policy prohibiting employees from accessing rider and driver data,” ET Tech continues. However, Ben Rossen, an FTC staff attorney, has revealed that in fact, Uber only enforced their claimed “strict policy” for around eight months.

The FTC conducted a separate probe during the same year that “God View” was discovered by the media, investigating a data breach in May of 2014. During the breach, more than 100,000 names and license numbers of Uber’s drivers were stolen.

In response to their investigation of the data breach, the FTC said that Uber “did not take reasonable, low-cost measures that could have helped the company prevent the breach.” One example the agency put forward was that Uber “allowed its engineers and programmers to use a single key that gave them full administrative access to all the data.”

Uber’s current settlement with the FTC is just the company’s latest attempt to move forward after continuing setbacks. For much of 2017, the company has been consumed with sexual harassment allegations, a lawsuit over its autonomous-car designs, and a wave of top executives leaving the company, including the CEO Travis Kalanick. Oh, and an investor lawsuit filed against that same departed CEO as in-fighting between a divided board of directors and angered shareholders increases.

Ohlhausen, who presided over the settlement with Uber, said, “Uber failed consumers in two key ways: first by misrepresenting the extent to which it monitored its employees’ access to personal information about users and drivers, and second by misrepresenting that it took reasonable steps to secure that data,” BBC News reports.

FTC Looks Into Price Deception Allegations Against Amazon

As the FTC investigates Amazon’s pending purchase of Whole Foods for antitrust violations, advocacy group Consumer Watchdog has lodged charges that the eCommerce giant has been misrepresenting list prices so as to make discounts look larger, Diane Bartz of Reuters reports. The FTC, which investigates deceptive advertising as well as antitrust compliance, has yet to launch a full investigation into the allegations, but has made formal inquiries into the matter.

Consumer Watchdog examined 1,000 listings on amazon.com, and found list prices (also known as “reference prices”) on less than half of them. Moreover, 61% of the reference prices that were listed were higher than prices at which Amazon had sold a given product in the previous 90 days.

Bartz reports that Amazon has called Consumer Watchdog’s study “deeply flawed” (Amazon’s words). She offers the following quote from a statement the company supposedly issued:

“The conclusions the Consumer Watchdog group reached are flat out wrong. We validate the reference prices provided by manufacturers, vendors and sellers against actual prices recently found across Amazon and other retailers.”

In March, David Pierson of The LA Times quoted Amazon’s website as saying that “list price means the suggested retail price of a product as provided by a manufacturer, supplier or seller.” But, the company does not provide detail as to how it determines list price.

Consumers use list prices to judge the value they are getting on an item. The greater the difference between the list price and the price at which a store is offering an item, the better the deal. So, companies stand to gain from inflating the list price. Bartz, however, points out language in the FTC’s “Guide Against deceptive pricing that warns against the practice.

Consumer Watchdog conducted a similar study in March across 4,000 Amazon products, and claimed that “at least half of the list prices examined were greater than the prevailing market price,” Pearson said. Following that study, the group filed a petition urging California Attorney General Xavier Becerra to launch an investigation.

Canada’s Competition Bureau fined Amazon Canada C$1 million (approximately $750,000) for deceptive pricing on amazon.ca. As part of the settlement, Amazon “made changes to the way it advertises list prices on its Canadian website,” Hollie Shaw of The Financial Post reports.

Shaw cites the Bureau as saying that the settlement “resolves its concerns.” There is no indication, however, that Amazon made similar amendments to the manner in which it displays prices on its US site.

The FTC came down on Amazon in 2016 over $84 million worth of in-game purchases made by children without parental consent. When Amazon first released its app store, which comes standard with devices like the Kindle Fire, the software did not require password authorization for in-game purchases, so children could make such purchases on their parents’ accounts.

In March 2012, amidst a barrage of complaints, Amazon updated the system to require passwords, but only on purchases over $20. Then, in 2013, Amazon began asking for passwords even on purchases below $20, but left a 20-minute window between transactions during which passwords were not required.

The FTC said the purchasing system was not one hundred percent fair to adult consumers until July 2014. Amazon initially pursued a lengthy appeals process, but in April 2017 it agreed to drop the appeal and refund parents for the unauthorized charges.

As for the price deception allegations, Consumer Watchdog has asked the FCC to delay Amazon’s acquisition of Whole Foods until list prices are represented accurately. But, Erin Fuchs of Yahoo! Finance cites antitrust expert Herbert Hovencamp as saying that even if the FTC finds substance in the price-deception allegations, it would have no grounds on which to impede the Whole Foods deal, because misrepresentation of price poses no antitrust threat.

“Normally, we don’t think about deceptive pricing as a sign of market power and indeed if you look at the people who do it, they’re not monopolists,” Hovenkamp said.

Featured image via Flickr/Global Panorama

A New Phone Scam Wants to know: Can You Hear Me?

Phone scams are age old and have claimed many victims over the years. A new scam, however, is using your just one word to make you a victim. Recently, the “Can you hear me” phone scam has begun to grow.

When you answer the phone, the automation on the other end goes through an introduction which provides the identity of a business or agency. After the introduction, the automated voice will ask you if you can hear. This is where the scam comes in.

If you say “yes”, the person on the other end may be recording you. Once they have your affirmation, they can use this to sign you up for products or services without your knowledge and badger you to pay. If you deny payment, they can use your “yes” affirmation as confirmation of agreed purchase.

So how do you avoid getting trapped up in scams like this one? Here are a few tips from the Better Business Bureau:

  • Hang up to any unsolicited calls. If you know you’re on the Do Not Call list and you get a call from an unfamiliar company, it is more than likely a scam.
  • Always avoid using answers like “sure”, “okay”, or “yes.”
  • If you’re prompted to press a button to place your number on the Do Not Call list, hang up. This is how scammers locate active phone numbers and will prompt more calls. Government agencies will not submit a Do Not Call registry.
  • Make note of the phone number and file a scam report with the BBB Scam Tracker and the FTC’s Do Not Call list.

Writing down the number doesn’t always prove helpful. Scammers have ways around caller IDs. However, many states have laws against recording someone without their knowledge. California, Connecticut, Florida, Maryland, Massachusetts, Montana, and New Hampshire all have laws against recording someone without their consent.

Walgreens Hits Wall With Rite Aid Merger

Walgreens’ acquisition of Rite Aid doesn’t seem to be going according to plan. Walgreens has yet to gain U.S. antitrust clearance from Federal Trade Commission (FTC) officials.

The FTC’s lawyers don’t seem too convinced of the Walgreens’ idea to sell 865 of its stores to Fred’s then take over Rite Aid. The hesitation on the deal also worries investors who are more than optimistic about the transaction. Yet Walgreens offer of $9 a share has dropped to $2.57.

The merger of Walgreens and Rite Aid is estimated at $9.4 billion. This would bring Walgreen past CVS Pharmacy, currently the number one pharmaceutical company in the United States.

But for some reason, the FTC has been dragging its feet. There’s a slight possibility that this could be due to the Trump administration’s recent takeover. There will be three positions to fill including the chairman’s seat. Edith Ramirez recently announced that she will step down as chairwoman come February 10th.

Although it isn’t clear who will replace these vacant seats, there is also no way to tell how the Trump administration will follow through. While the Obama administration was in power, the FTC tried to make sure that mergers were always in benefit of the consumer.

One of the jobs of the FTC is to make sure that the buyer’s assets can bring back competition. That hasn’t always been the case. For example, the FTC allowed the acquisition of Hertz’s business Advantage Rent A Car by another company. Not long after the company obtained Advantage, Advantage had to file for bankruptcy.

The CFO of CVS stated at a conference that he doesn’t believe Fred’s will be feasible competition in the foreseeable future.

Uber Pays More Than $20 Million In Settlement with FTC

The Federal Trade Commission brought charges to Uber on behalf of the drivers who claimed to have been misled about how much money they could expect to make and how much it would cost to buy or lease a car through the company. The ride-sharing company agreed to settle these claims for $20 million.

The money from the settlement will be distributed to the drivers affected by Uber’s alleged deceptive claims. The settlement also prohibits Uber from making claims about drivers’ potential income that are false, misleading, on unsubstantiated.

In an email, an Uber spokesman said “We’re pleased to have reached an agreement with the FTC. We’ve made many improvements to the driver experience over the last year and will continue to focus on ensuring that Uber is the best option for anyone looking to earn money on their own schedule.”

Uber drivers have previously staged protests and filed lawsuits to bring attention to the fact that their pay is too low. While Uber previously said that drivers can make up to $30 and hour, most drivers say they do not make anything close to that figure.

There are conflicting studies that reflect the varying wages of drivers. According to a November study by Uber employee and shareholder Jonathan Hall, drivers make an average of $20.19 an hour. A June report by Buzzfeed News, however, shows that drivers make an average of less than $13.25 an hour in urban areas like Detroit, Houston, and Denver.

In the FTC’s complaint, the agency says Uber claimed drivers could earn $90,000 annually in New York and $74,000 annually in San Francisco, yet drivers actually make an average of $61,000 and $53,000, respectively. Uber, the FTC alleged, attempted to attract new drivers to sign up by exaggerating their potential salaries.

The FTC’s complaint continues, “When Uber’s promised earnings have not materialized, and drivers have attempted to cancel their auto agreements, they have incurred significant monetary harm. Uber’s practices have caused its drivers to suffer millions of dollars of injury.” Another part of the agency’s complaint was that Uber’s car financing program turned out to be more expensive for drivers than marketed.

In a statement, director of the FTC’s Bureau of Consumer Protection Jessica Rich said “This settlement will put millions of dollars back in Uber drivers’ pockets.”

FTC Chairwoman Announces She Will Step Down

After three years as the Federal Trade Commission Chairwoman (FTC), Edith Ramirez is now stepping down. This week she announced she will finish out her time until President-elect Donald Trump takes his seat in the White House.

Ramirez gained the FTC a reputation during her time in Washington. Most know the FTC as technology regulators. For example, many would relate the emissions software scandal, associated with Volkswagen, to the Environmental Protection Agency. However, consumers should know that the FTC was in charge of figuring how much Volkswagen owed its consumers.

Yet Volkswagen isn’t the only company the FTC cracked down on. Cell phone carriers like AT&T and T-Mobile plague their users with third party charges all the time. Ramirez and the FTC strong-armed the companies into refunding $170 million to consumers.

From cars to cell phones then to apps like Snapchat. In 2014 the app allowed 4.6 million of it’s users to fall victim to an informational leak. Ramirez and the FTC aided in the regulation of security issues for Snapchat. The FTC also filed a lawsuit on Wyndham Worldwide. The FTC hoped to prove that companies are just as responsible for security breaches and hacks.

However, you can’t have the good without the bad. During Ramirez’s time as chairwoman, the FTC faced criticism as well. Many, including a few FTC members, disapproved of the way the FTC handed some technology cases. The criticizers said the FTC didn’t think of the consumer when it cracked down on certain issues that could be greatly beneficial. Another good example is the approach the FTC took towards Apples in-app purchases.

Later in 2013, a staff memo leaked. The memo showed that, in fear of the time and cost a legal battle would propose, the FTC turned a blind eye to Google. Some members discovered that the FTC initially suspected Google of anti-competitive behavior, like preventing advertisers from working with its rivals.

Despite these few eyebrow raises and questions of how the FTC handles big corporations, many believe that while Ramirez was chairwoman the FTC did a lot of good. Executive director for the Center for Digital Democracy commented, “Edith Ramirez brought the FTC into the 21st century.”

Ms. Ramirez departure from the position as chairwoman on February 10th. The only Republican at FTC, is Maureen Ohlhausen, who is rumored as a replacement.

Amazon Sued for Unauthorized App Purchases by Children

The Federal Trade Commission (FTC) sued online retailer Amazon Thursday, July 10, over children’s in-app purchases on Kindle Fire and other devices.

According to USA Today, the FTC filed a lawsuit in U.S. District Court, charging that Amazon intentionally let children make unauthorized purchases within apps that added up to millions of dollars on mobile devices without parental consent. The in-app purchases, usually items that are offered within mobile games that enhance a game or help users to advance levels, ranged from 99 cents to $99 per consumer.

Jessica Rich, director of the FTC’s consumer protection bureau, said parents kept unwillingly receiving these bills costing hundreds of dollars.

“We are seeking this money back for consumers as well as an order preventing the company from billing consumers without their permission in the future,” Rich said.

The Washington Post reported that the FTC said there are no password requirements to prevent children from buying virtual items in the apps. It said Amazon violated the FTC act by charging parents for their children’s purchases without permission.

“Amazon’s in-app system allowed children to incur unlimited charges on their parents’ accounts without permission,” Edith Ramirez, FTC chairwoman, said. “Even Amazon’s own employees recognized the serious problem its process created.”

An Amazon spokeswoman said the lawsuit was “deeply disappointing,” and the retailer has improved its app store process since it was launched in 2011.

 

 

T-Mobile Hides Fees in Phone Bills

According to the Federal Trace Commission (FTC), T-Mobile has been placing hidden charges in phone bills for premium third-party text messaging services. The FTC claimed that T-Mobile has made “hundreds of millions of dollars” through these charges in a practice known as “cramming.”

The premium services included horoscopes and celebrity gossip, and costs $9.99 per month. Consumers usually signed up for these services through ads on their phone or on a website. The services were supposed to require payment authorization twice, but T-Mobile had an agreement with these third-party services to charge customers automatically.

On a monthly bill, these mystery charges sometimes appeared as “usage” charges, coupled with a vague description of the service, often presenting a nonsensical set of numbers and letters. Pre-paid customers who did not receive a bill had the fraudulent charges debited from their accounts without their knowledge. This resulted in unsatisfied and overcharged customers.

The FTC claimed that T-Mobile did not clarify who was charging them for the services on their phone bills. Moreover, some customers did authorize the payment, but T-Mobile could not provide any evidence to support it. An eyebrow-raising 40 percent of customers asked for refunds, which should have tipped off T-Mobile to a serious problem. FTC’s complaint also alleges that T-Mobile’s full phone bill, often longer than 50 pages, made it incredibly difficult for customers to spot third-party charges.

The FTC hopes to force T-Mobile to pay back customers for fraudulent charges and put a stop to bill cramming throughout the cell phone industry. An FCC investigation could result in a fine for T-Mobile. Other mobile carriers have paid an enormous price for deceptive fees. In June, Lin Mao, in addition to a long list of corporate defendants, agreed to surrender $10 million in assets for cramming their customers through numerous companies.

 

tmobile-samplebill
via ftc.gov

 

 

 

 

 

 

 

Nomorobo Blocks Robocallers for Consumer for Free

Aaron Foss, founder and CEO of Telephone Sciences Corp., is trying to build a business around his “Nomorobo” service, which prevents unwanted robocalls from reaching the consumer.

Last October, the Federal Trade Commission (FTC) held a contest for developers to build an easy-to-use system to block unsolicited robocallers. Foss’ cloud-based Nomorobo service won the FTC Technology Achievement Award and a $50,000 prize.

Nomorobo detects high-frequency calling patterns and calls that were auto-dialed. Nomorobo also compares the caller’s number to an FTC blacklist and hangs up on blacklisted numbers.

When Nomorobo is uncertain, it prompts the caller with a “CAPTCHA” test. If the caller passes, the call goes through, but if the caller fails, the number is added to the blacklist.

Nomorobo can also detect legitimate automated call services, such as school cancellations or medical appointments, and it lets those calls go through.

Aaron Foss, founder and CEO, Telephone Sciences Corp.
Aaron Foss, founder and CEO, Telephone Sciences Corp.

Phone carriers did not want to cooperate with Nomorobo, which made it difficult for Telephone Sciences Corp. to offer the service to consumers.

“Instead of fighting, I decided to go around them,” Foss explained in a New York Business Journal article. “I piggybacked off a service that they already offered, simultaneous ring. When consumers add Nomorobo’s phone number to their simultaneous ring list, Nomorobo is able to answer and quickly hang up [on] robocalls for them.”

Foss believes that matters have to get worse before the carriers will feel the need to comply and offer a service like Nomorobo.

“Consumers can use the service for free but businesses have to pay… [F]or businesses, robocalls cost them a significant amount of resources… They are more than happy to pay for a service that reduces their costs.”

Ten months after the contest, interest in the service continues to grow. Over 125,000 consumers use the Nomorobo service, according to Foss. Nomorobo has stopped nearly 4.6 million robocalls.

 

 

 

 

 

 

Photo:  Nomorobo/Courtesy photo/Aaron Foss, founder and CEO, Telephone Sciences Corp.