JAMES L. ROBART, District Judge.
Plaintiff, the Federal Trade Commission ("FTC"), filed its Complaint for Permanent Injunction and Other Equitable Relief in this matter, pursuant to Section 13(b) of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. § 53(b). The FTC and Defendant, T-Mobile USA, Inc. ("T-Mobile"), stipulate to the entry of this Stipulated Order for Permanent Injunction and Monetary Judgment ("Order"), without trial or final adjudication of any issue of fact or law, in order to resolve all matters in dispute in this law enforcement action by the FTC.
1. There being no objection, the Court finds that it has jurisdiction over this matter.
2. The Complaint charges that T-Mobile participated in deceptive and unfair acts or practices in violation of Section 5 of the FTC Act, 15 U.S.C. § 45, by including unauthorized third-party charges on the telephone bills of its mobile phone customers.
3. T-Mobile waives all jurisdictional defenses or objections related to either the FTC Act or the Communications Act of 1934, 47 U.S.C. §§ 151, et seq., solely for purposes of entry, construction, modification, and enforcement of this Order. T-Mobile does not admit or consent to the FTC's jurisdiction for any other purposes or proceedings.
4. The parties, by and through their counsel, have agreed that entry of this Order fully and finally resolves all issues between them arising from or related to PSMS or claims of Unauthorized Third-Party Charges for all time periods up to the date of entry of this Order and precludes further litigation between the FTC and T-Mobile on the resolved issues except for purposes of enforcing or collecting on this Order.
5. T-Mobile waives any claim that it may have under the Equal Access to Justice Act, 28 U.S.C. § 2412, concerning the prosecution of this action through the date of this Order, and agrees to bear its own costs and attorney's fees.
6. T-Mobile and the FTC waive all rights to appeal or otherwise challenge or contest the validity of this Order.
7. The FTC and T-Mobile acknowledge and agree that this is a compromise settlement of disputed issues and T-Mobile neither admits nor denies the truth or falsity of any claims or allegations made in the Complaint. Accordingly, this Order shall not be deemed or construed in any other proceeding as: (a) an admission of the truth or falsity of any claims or allegations heretofore made or any potential claims except as specifically stated in this Order; (b) an admission by T-Mobile that it has violated or breached any law, statute, regulation, term, provision, covenant, or obligation of any agreement; or (c) an acknowledgement or admission by any of the parties of any duty, obligation, fault, or liability whatsoever to any other party or to any third party. This Order shall not be used as evidence or precedent in any action or proceeding, except an action or proceeding to enforce or collect on this Order.
For the purpose of this Order, the following definitions apply:
1. "Account Holder" means any individual or entity who is or was responsible for paying all charges associated with all lines on that individual's or entity's mobile phone account with T-Mobile.
2. "Bill" means a Consumer's mobile telephone bill or prepaid mobile account, as applicable.
3. "Block" means a restriction placed on a Consumer's account that prevents one or more lines from being used to purchase Third-Party Products and from being billed for Third-Party Charges on a Consumer's Bill.
4. A statement is "Clear and Conspicuous" if it is disclosed in such size, color, contrast, location, duration, and/or audibility that it is readily noticeable, readable, understandable, and/or capable of being heard. A statement may not contradict or be inconsistent with any other information with which it is presented. If a statement materially modifies, explains, or clarifies other information with which it is presented, then the statement must be presented in proximity to the information it modifies, explains, or clarifies, in a manner that is readily noticeable, readable, and understandable, and not obscured in any manner. In addition:
5. "Collectible Consumer Debt" means the amount owed to T-Mobile by a Consumer whose accounts are not paid-in-full that T-Mobile owns and may legally take legal action to collect.
6. "Commercial PSMS" means the use of PSMS to bill for Products.
7. "Consumer" means a T-Mobile current or former customer, subscriber, or purchaser of Products for which Third-Party Charges are or were placed on the Consumer's Bill from T-Mobile, whether that person is responsible for paying the Bill or has a device that is billed to a shared account. "Consumer" does not include any business entity or any state, federal, local, or other governmental entity, if (1) the business entity or government, and not the employees or individuals working for or with that business entity or government, is solely liable to T-Mobile for payment of all charges billed on that account, and (2) the ability to process Third-Party Charges through that account is not available unless the business entity or government affirmatively requests that certain or all mobile devices be provided the ability to authorize placement of such Third-Party Charges. Nothing in this definition of "Consumer," or in any other provision of this Order, shall be read or construed to require T-Mobile (a) to share customer proprietary network information ("CPNI") with any person not legally entitled to receive CPNI; (b) to share customer information in such a way that it would violate any applicable law or T-Mobile's privacy policy or any other applicable privacy policy, provided that such policies do not impose any unnecessary or unreasonable burdens on Account Holders seeking information regarding their mobile phone accounts or seeking refunds; or (c) to grant more than one refund for any single Unauthorized Third-Party Charge.
8. "Consumer Redress Period" means the twelve month period of time beginning on July 1, 2014.
9. "Effective Date" means the date this Stipulated Order for Permanent Injunction and Monetary Judgment is approved and entered by the Court.
10. "Express Informed Consent" means an affirmative act or statement that is made by a Consumer, giving unambiguous assent to be charged for the purchase of a Third-Party Product after receiving a Clear and Conspicuous disclosure of material facts.
11. "Participating States" means the following states and commonwealths: Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, and Wyoming, as well as the District of Columbia.
12. "Premium Short Messaging Service" or "PSMS" means a service that distributes paid content to a Consumer using the Short Message Service ("SMS") and Multimedia Messaging Service ("MMS") communication protocols via messages that are routed using a Short Code, resulting in a Third-Party Charge.
13. "Product" means content and/or services that can be used on a mobile device for which charges are placed on the Consumer's Bill by T-Mobile. "Product" excludes contributions to charities, candidates for public office, political action committees, campaign committees, campaigns involving a ballot measure, or other similar contributions. "Product" also excludes co-branded and white label products where content and services are sold jointly and cooperatively by T-Mobile and another entity, where the content and/or services is placed on the subscriber's bill as a T-Mobile charge, and T-Mobile is responsible for accepting complaints, processing refunds, and other communications with the consumer regarding the charge. "Product" also excludes handset insurance and extended warranty offerings, and collect calling services.
14. "Short Code" means a common code leased from the CTIA Common Short Code Administration that is comprised of a set of numbers, usually 4 to 6 digits, to and from which text messages can be sent and received using a mobile telephone.
15. "Third Party" means an entity or entities, other than T-Mobile, that provides a Product to Consumers for which billing is made through T-Mobile's Bills.
16. "Third-Party Charge" means a charge for a Third-Party Product placed on a Consumer's Bill.
17. "Third-Party Product" means a Product provided by a Third Party.
18. "T-Mobile" means T-Mobile USA, Inc., and its successors and assigns.
19. "Unauthorized Third-Party Charge" means a Third-Party Charge placed on a Consumer's Bill without the Consumer's Express Informed Consent.
IT IS ORDERED that T-Mobile and its officers, agents, servants, and employees, and all others in active concert or participation with any of them, who receive actual notice of this Order, whether acting directly or indirectly, shall:
A. Begin developing and implementing a system, which shall be fully implemented by T-Mobile no later than March 1, 2015, to obtain Express Informed Consent before a Consumer is billed for any Third-Party Charge. The Consumer's Express Informed Consent may be provided to T-Mobile or to another person or entity obligated to T-Mobile to obtain such consent. T-Mobile or other person or entity shall retain sufficient information to allow such consent to be verified. If Express Informed Consent is not directly collected by T-Mobile, T-Mobile shall implement reasonable policies and practices to confirm Express Informed Consent will be appropriately collected and documented by the person or entity obligated to do so, and shall monitor and enforce those policies and practices to confirm Express Informed Consent is appropriately collected and documented, and where Express Informed Consent has not been appropriately collected and documented, shall require remedial action (which may include, for example, suspension, proactive credits, or retraining) or cease billing for such charges. While the system described by this Paragraph is being developed and implemented, T-Mobile shall take reasonable steps to obtain Express Informed Consent before a Consumer is billed for any Third-Party Charge. Provided, however, for purposes of this Section, for charges incurred through operating system storefronts, such reasonable policies and practices may, for example, consist of T-Mobile or its agents making a statistically valid random sample of purchases to demonstrate whether the storefront is collecting Express Informed Consent consistent with this Order; and
B. Beginning no later than April 1, 2015, implement a system whereby the Consumer (and, for multiline accounts, the Account Holder, if designated) will be sent a purchase confirmation, separate from the Bill, of every Third-Party Charge, including recurring charges, that will appear on his or her Bill. Any such purchase confirmation shall be sent within a reasonable period of time following the time a Third-Party Product is purchased or the recurrence of a Third-Party Charge, and shall identify Blocking options that T-Mobile makes available to Consumers and/or provide access to such information. For multiline accounts, T-Mobile may provide the Account Holder the option to elect not to receive such purchase confirmations.
IT IS FURTHER ORDERED that T-Mobile shall, beginning no later than April 1, 2015, provide a Clear and Conspicuous disclosure about Third-Party Charges and Blocking options in informational material provided at or near the time of subscribing to service, to the extent Third-Party Charges are offered and available with the service, and which is provided in a context separate from the actual subscriber agreement documents. Such disclosure shall include or provide access to a description of Third-Party Charges, how Third-Party Charges appear on Bills, and options available to Consumers to Block Third-Party Charges. Consumers shall not incur any data or text charges for receiving or accessing the information discussed in this Section.
IT IS FURTHER ORDERED that T-Mobile shall:
A. For at least 6 years from the Effective Date, conduct a training program with its customer service representatives, at least annually, to administer the requirements of this Order. To the extent that T-Mobile no longer permits Third-Party Charges on Consumers' Bills, T-Mobile will conduct one training program within three months of such cessation and will have no further obligation to conduct training programs under this Section so long as T-Mobile does not permit Third-Party Charges on Consumers' Bills; and
B. After a consumer disputes a Third-Party Charge within three months of the last charge for a particular Product:
For entities T-Mobile acquires in the future ("Newly Acquired Entities"), except as provided in Section III.B., T-Mobile shall have a reasonable period of time, which in no event shall exceed 6 months, in which to bring said entities into compliance with this Order. During the 6 month period, T-Mobile shall take reasonable steps to obtain Express Informed Consent before a Consumer is billed for any Third-Party Charge.
IT IS FURTHER ORDERED that T-Mobile shall provide full refunds to Consumers who have been charged by T-Mobile for unauthorized Commercial PSMS charges from June 1, 2010 through the Effective Date of this Order. T-Mobile will provide full refunds as follows:
A. T-Mobile shall provide prompt refunds to Consumers for the full amount of any unauthorized Commercial PSMS charge that has not already been fully refunded according to T-Mobile's billing records. T-Mobile shall refund no less than $90 million (the "PSMS Charges Refund Amount") for unauthorized Commercial PSMS charges during the Consumer Redress Period, to be monitored by the FTC. T-Mobile may include in the PSMS Charges Refund Amount any refunds granted by T-Mobile (a) since June 10, 2014, or (b) as a result of claims made within the Consumer Redress Period, even if T-Mobile pays the refunds outside the Consumer Redress Period. If T-Mobile refunds less than $90 million, after applying the credits specified in Sections V.C and V.D, it shall remit the balance to the FTC, so the FTC can make additional redress, disgorgement, or consumer informational remedies pursuant to Section V.E. For purposes of this Section V, a refund under Section V.B.3. a must be provided within 60 days of receiving a complete and valid claim form for a refund of an unauthorized Commercial PSMS charge.
B. To effectuate Section V.A. of this Order:
2. T-Mobile shall promptly provide, upon request by a Consumer, the total amount of Commercial PSMS charges charged to the Consumer that have not been fully refunded by T-Mobile or a Third Party, the dates of such charges, and the Third Party initiating such charges;
3. Upon a Consumer's affirmation that the Consumer was charged for unauthorized Commercial PSMS charges, T-Mobile shall provide prompt refunds to the Consumer for the unauthorized Commercial PSMS charges as follows:
4. T-Mobile shall ensure that Consumers obtain refunds of unauthorized Commercial PSMS charges through a single claim form. Although T-Mobile may list each Commercial PSMS charge separately on the claim form, Consumers must be allowed to challenge all Commercial PSMS charges at once, such as by marking a single box. T-Mobile shall not require Consumers to submit any documentation other than a complete and valid claim form (though T-Mobile may give Consumers the option to submit documentation to support claims for unauthorized Commercial PSMS charges not reflected on reports provided to the Consumer pursuant to Section V.B.2), waive any rights, or impose any unnecessary or unreasonable burdens on Consumers seeking refunds. Provided, however, for any unauthorized Commercial PSMS charges that T-Mobile fully refunds to, or credits against the debt of, a Consumer, the Consumer's claim against T-Mobile with respect to the fully refunded charges will be deemed satisfied.
5. Within 30 days of the Effective Date, T-Mobile shall notify all Consumers that it has identified as having visited T-Mobile's redress website before August 31, 2014, but failed to submit a claim form, and for whom T-Mobile captured contact information during the Consumer's visit to the website, that improvements have been made to the claims process and notifying the Consumers of their right to obtain full refunds for unauthorized Commercial PSMS charges that have not already been fully refunded according to T-Mobile's billing records.
C. If after the expiration of the Consumer Redress Period, T-Mobile has failed to refund the full PSMS Charges Refund Amount pursuant to Sections V.A. and V.B, T-Mobile may apply towards the PSMS Charges Refund Amount up to $22.5 million of any fees, costs, penalties, or other payments to any other federal, state, or local government entity that, within 12 months of the Effective Date, are paid by T-Mobile as a result of any agreement or order related to unauthorized Commercial PSMS charges with such federal, state, or local government entity, or as the result of a court order related to unauthorized Commercial PSMS charges.
D. If, after applying any fees, costs, penalties, or other payments pursuant to Section V.C, the PSMS Charges Refund Amount is not reached, T-Mobile may, at its discretion, apply as credit towards the balance within 90 days of the end of the Consumer Redress Period (a) any refunds granted to Consumers who were charged a Commercial PSMS charge for a good or service offered by a Third Party that has been the subject of a federal or state law enforcement action and for which a full refund has not yet been provided according to T-Mobile's billing records; and/or (b) any reductions in outstanding balances of inactive accounts of Consumer up to a total of $37.5 million, provided that any such balance constitutes Collectible Consumer Debt and any such reduction shall not exceed the total amount of Commercial PSMS charges charged to a Consumer's account that have not been fully refunded according to T-Mobile's billing records. Any outstanding balance on the PSMS Charges Refund Amount after application of the credits in this Subparagraph shall be remitted to the FTC within 105 days of the end of the Consumer Redress Period and shall not constitute a penalty.
E. All money paid to the FTC pursuant to this Order shall be deposited into a fund administered by the FTC or its designee to be used for equitable relief, including consumer redress and any attendant expenses for the administration of any redress fund. If the FTC, in consultation with the executive committee of the Attorneys General of the Participating States and the Federal Communications Commission, determines further redress is no longer practicable, the FTC may apply all remaining funds for such other equitable relief (including consumer information remedies) as it determines to be reasonably related to T-Mobile's practices alleged in the Complaint. Any funds not used for redress or other equitable relief such as consumer information remedies, shall be deposited to the U.S. Treasury as disgorgement as equitable relief, or transferred to the Attorneys General of the Participating States to be used for proper purposes as set forth in their assurances of voluntary compliance, consent decrees, and court orders with T-Mobile.
F. If T-Mobile has reported to any consumer reporting agency an outstanding balance of a Consumer's inactive account, T-Mobile shall furnish correct account information to that consumer reporting agency or cease reporting the account within 30 days of any reduction in the outstanding balance of the account pursuant to Sections V.B.3.b or V.D of this Order.
G. Within 120 days of the end of the Consumer Redress Period, T-Mobile shall provide the FTC with records sufficient to show the notification provided by T-Mobile to Account Holders of the right to full refunds of unauthorized Commercial PSMS charges, the refunds requested and paid to Account Holders during the Consumer Redress Period, any payments to federal, state, or local government entities that T-Mobile applied to the PSMS Charges Refund Amount pursuant to Section V.C, that all outstanding balances of inactive accounts that were reduced pursuant to Sections V.B.3.b or V.D constituted Collectible Consumer Debt, that any notifications required by Section V.F have been made, and any refund requests that were denied due to a prior full refund or any other reason. All such records, to the extent they pertain to any customer or subscriber of T-Mobile and are protected by the Electronic Communications Privacy Act, 18 U.S.C. § 2703, shall be produced in a manner and form in which Consumers' personally identifiable information, such as name, address, telephone, e-mail address, or other unique identifier that could permit the information shared to be associated with the relevant subscriber or customer of T-Mobile, is redacted.
H. T-Mobile relinquishes dominion and all legal and equitable right, title, and interest in all assets transferred pursuant to this Order and may not seek the return of any assets.
I. The facts alleged in the Complaint will be taken as true, without further proof, only in the event of a non-dischargeability complaint in any bankruptcy case.
J. The facts alleged in the Complaint establish all elements necessary to sustain an action by the FTC pursuant to Section 523(a)(2)(A) of the Bankruptcy Code, 11 U.S.C. § 523(a)(2)(A), and this Order will have collateral estoppel effect for such purposes.
K. T-Mobile acknowledges that its Taxpayer Identification Numbers, which T-Mobile must submit to the FTC, may be used for collecting and reporting on any delinquent amount arising out of this Order, in accordance with 31 U.S.C. § 7701.
IT IS FURTHER ORDERED that T-Mobile obtain acknowledgments of receipt of this Order:
A. T-Mobile, within 7 days of entry of this Order, must submit to the FTC an acknowledgment of receipt of this Order.
B. Within 7 days of entry of this Order, T-Mobile must deliver a copy of this Order to all officers and directors of T-Mobile.
IT IS FURTHER ORDERED that T-Mobile make timely submissions to the FTC:
A. One year after entry of this Order, T-Mobile must submit a compliance report. T-Mobile must: (i) identify the primary physical, postal, and email address and telephone number of designated points of contact, which representatives of the FTC may use to communicate with T-Mobile, and will update this information as necessary; and (ii) provide a certification from a senior corporate manager with the requisite corporate and organizational authority that T-Mobile has established and implemented the requirements of this Order and is not aware of any material noncompliance that has not been (a) corrected or (b) disclosed to the FTC. The certification will be based on the personal knowledge of the senior corporate manager or the personal knowledge of T-Mobile subject matter experts upon whom the senior corporate manager reasonably relies in making the certification.
B. For a period of one year after April 1, 2015, and upon request for five years thereafter, T-Mobile shall provide a report to the FTC every 3 months ("Quarterly Reports") documenting its compliance with the requirements of Section III.B (and its subsections). This documentation shall include:
C. Information in Quarterly Reports shall be presented on a national basis and provided electronically in a format to be agreed to by the parties. Quarterly Reports shall be provided within 30 days of the end of each calendar quarter.
D. To the extent T-Mobile believes that Quarterly Reports submitted pursuant to this Section constitute confidential commercial and financial information that is proprietary and sensitive, T-Mobile may produce such Quarterly Reports pursuant to confidentiality provisions in 16 C.F.R. §§ 2.33 and 4.9(c) and mark them as confidential.
E. T-Mobile must submit to the FTC notice of the filing of any bankruptcy petition, insolvency proceeding, or similar proceeding by or against T-Mobile within 14 days of its filing.
F. Unless otherwise directed by an FTC representative in writing, all submissions to the FTC pursuant to this Order must be emailed to DEbrief@ftc.gov or sent by overnight courier (not the U.S. Postal Service) to: Associate Director for Enforcement, Bureau of Consumer Protection, Federal Trade Commission, 600 Pennsylvania Avenue NW, Washington, DC 20580. The subject line must begin: FTC v. T-Mobile USA, Inc. (X140053).
G. T-Mobile's submission of reports to the FTC as required by this Order, and its adherence to other aspects of this Order, shall not under any circumstances be taken as any admission of the FTC's jurisdiction over T-Mobile for any other purpose, in any other context or under any other set of facts.
IT IS FURTHER ORDERED that T-Mobile must create and retain the following records:
A. No later than March 1, 2015, T-Mobile shall implement a process to track (i) all Consumer claims that a Third-Party Charge was unauthorized for which T-Mobile demonstrated that purchaser provided Express Informed Consent, and (ii) refunds/credits provided pursuant to Section III.B.3.
B. No later than March 1, 2015, T-Mobile shall implement systems that allow it to maintain the information described in Section VIII.A. Each record created pursuant to this Section shall be maintained for a period of 6 years from the date of its creation. T-Mobile's obligation to maintain records for 6 years from the date of their creation shall continue for 20 years after entry of the Order.
C. For 20 years after the entry of this Order, T-Mobile must create accounting records showing the revenues associated with all Third-Party Charges and retain such records for 5 years from the date of their creation. If such records are requested by the FTC those records may be produced by T-Mobile pursuant to the confidentiality provisions in 16 C.F.R. §§ 2.33 and 4.9(c) and marked by T-Mobile as confidential
IT IS FURTHER ORDERED that, for the purpose of monitoring T-Mobile's compliance with this Order:
A. The FTC is authorized to obtain discovery, without further leave of court, using any of the procedures prescribed by Federal Rules of Civil Procedure 29, 30 (including telephonic depositions), 31, 33, 34, 36, 45, and 69.
B. Nothing in this Order limits the FTC's lawful use of compulsory process, pursuant to Sections 9 and 20 of the FTC Act, 15 U.S.C. §§ 49, 57b-1. T-Mobile may assert any and all defenses, rights, or privileges available to it.
IT IS FURTHER ORDERED that this Court retains jurisdiction of this matter for purposes of construction, modification, and enforcement of this Order.
SO ORDERED.
