T-Mobile’s ‘Fake Ring Tone’ Scheme Harmed Rural Wireless Carriers and Consumers, Class Action Alleges [UPDATE]
Last Updated on September 3, 2021
Craigville Telephone Co. et al. v. T-Mobile USA, Inc. et al.
Filed: November 1, 2019 ◆§ 1:19-cv-07190
T-Mobile and Inteliquent face a class action that claims a $40M FCC consent decree does nothing to compensate rural wireless carriers and consumers harmed by a "fake ring tone" scheme.
Case Updates
September 3, 2021 – Lawsuit Dismissed
The lawsuit detailed on this page has been dismissed after a judge ruled that the local phone company plaintiffs had failed to establish T-Mobile had deliberately attempted to defraud them.
In an August 31 order, found here, U.S. District Judge John Z. Lee found that the plaintiffs’ RICO claims and tortious interference claims do not plausibly allege that T-Mobile’s intention in using fake ring tones was to rob the plaintiffs of their access charges for completed calls by inducing callers to hang up. To the contrary, the judge wrote, the FCC found that T-Mobile’s ring tones were used in order “to mask” its call completion problems in rural areas by tricking callers into thinking their calls were going through.
According to the order, T-Mobile’s “benign purpose” in attempting to minimize its costs by covering up connectivity problems “is the only one that may reasonably be inferred from T-Mobile’s alleged scheme.”
Judge Lee also dismissed the plaintiffs’ Illinois Consumer Fraud and Deceptive Business Practices Act claim, finding that the law does not apply to transactions that take place outside Illinois.
Finally, the judge granted co-defendant Inteliquent’s motion to dismiss because the company is an “intermediate provider” and not a “covered provider” bound by FCC regulations as defined in a 2012 ruling, according to the August order.
The claims against T-Mobile and Inteliquent have been dismissed with prejudice, meaning the plaintiffs cannot re-file their suit.
T-Mobile’s much-publicized, routine failure to deliver high-cost calls to rural areas nationwide is at the center of a proposed class action lawsuit that claims a $40 million consent decree the carrier entered into with the Federal Communications Commission (FCC) falls far short of adequately compensating those affected by the company’s misconduct.
Filed by two telecommunications companies, the lawsuit states that T-Mobile, in an effort to cover up the fact that it was having consistent and legally problematic difficulty delivering calls to rural areas, inserted fake ring tones into calls placed to those areas before they were connected to their intended recipient to make it seem like the calls were immediately going through. This misconduct, according to the complaint, has both deterred consumers from making calls to rural America and harmed local phone companies such as the plaintiffs, who argue that they ended up bearing the lion’s share of the blame for millions of call failures.
Overall, the case points out, T-Mobile, Inteliquent and a number of presently unidentified co-conspirators broke a January 2014 law that prohibits carriers from delivering a ringtone when a call has not been connected. According to the lawsuit, the specifics of the defendants’ scheme saw T-Mobile’s intermediate carriers—like co-defendant Inteliquent—who failed to deliver rural-bound calls route those calls to other parties who were “not equipped to deliver the traffic to its intended destination in a reliable manner.” This created “significant volumes of call failures,” some of which, according to the suit, may have been caused intentionally by T-Mobile and its co-conspirators.
The 109-page lawsuit alleges T-Mobile and co-defendant Inteliquent’s scheme, summarily a broad attempt to both save money and mask intermediate carriers’ routine failure to deliver rural-bound calls, has impacted millions of consumers who wrongfully believed that their calls had been successfully connected but that the recipients of such were “simply not answering.” Worse, the plaintiffs stress, is that T-Mobile’s shifting of the blame to rural carriers significantly injured the companies, who the lawsuit says suffered losses of profits and revenue, missed opportunities to gain intercarrier compensation, and reputational harm in addition to the value of hours spent investigating and responding to customer complaints.
“The use of the fake ring tones deceived customers into believing the calls were reaching their intended destination and thereby shifted blame for those call failures onto local phone companies, particularly rural carriers, even though the calls never even made it to these rural carriers’ networks,” the lawsuit reads.
When the aforementioned scam was discovered, T-Mobile reached a $40 million settlement with the FCC, which stated that calls finding their way through intermediate carriers to an intended recipient is “a basic tenet of the nation’s phone system.” As the lawsuit tells it, however, T-Mobile’s deal with the U.S. government did nothing to compensate rural consumers or smaller carriers victimized by the company’s fake ring tone scheme. Further, T-Mobile, the case says, has made no public apology for its conduct or taken any action to atone to customers or the predominantly rural carriers who comprise the proposed class. Significantly, T-Mobile’s net profit was reportedly $2.88 billion during the time in which it was inserting ring tones into non-delivered calls, the case says, making the FCC fine no more than “a slap on the wrist.”
For consumers, the lawsuit provides that T-Mobile customers have “little avenue for redress” due to binding arbitration agreements wielded by the company as part of its terms and conditions. Moreover, while the FCC consent decree and admission of guilt by T-Mobile ostensibly cleared the way for rural carriers to take the company to court with hopes of recovering compensation, the deal fails to address the role of T-Mobile’s co-conspirators in the fake ring tone scheme, the plaintiffs add.
With regard to co-defendant Inteliquent, the lawsuit explains that the carrier, who in 2015 entered into a master services agreement with T-Mobile to become the company’s exclusive carrier to transit and terminate traffic, was losing money on the contract. The case alleges that as a result, Inteliquent “became desperate” to reduce its costs for access charges it was required to pay to T-Mobile, which in turn led the companies to actively collude to develop what the plaintiffs describe as “strategies to deter or prevent customers from making phone calls” saddled with higher per-minute costs to complete, such as those placed to rural areas.
Rounding out the complaint is the charge that T-Mobile and Inteliquent have “committed multiple acts of wire fraud” amid a “pattern of racketeering activity” involving the companies and several currently unidentified co-conspirators. The plaintiffs stress that the defendants and their yet-unknown co-conspirators knew full well that the scheme to deceive rural-calling consumers with fake ring tones was illegal yet remained silent, with proposed class members such as the plaintiffs left to shoulder the blame. From the lawsuit:
“All along, T-Mobile, Inteliquent, and T-Mobile’s other intermediaries participating in the scheme either remained silent, repeatedly failing to inform T-Mobile’s customers that their secretly employed illegal practices were the cause of countless call completion inquiries they received from consumers and rural carriers who could never diagnose the root cause because it was covertly buried within the fake ring tone enterprise’s networks and confidential business practices; or, they expressly placed blame on rural carriers.”
The lawsuit can be read below.
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