T-Mobile Customer Sues Over Add-On Charge Purported to Be a Government Fee

A long-time T-Mobile customer is suing the carrier over the “regulatory programs & telco recovery fee” on its monthly invoices, said a class action removed Thursday to U.S. District Court for Central California in Los Angeles.

Esperanza Rendon filed the original complaint in Los Angeles County Superior Court Nov. 7 but didn't serve it on T-Mobile, said the company’s notice of removal (docket 2:24-cv-01666). She filed an amended complaint Jan. 29, then served the amended complaint, with two additional causes of action, and then served the summons on T-Mobile Jan. 31, court documents show.

The California resident's T-Mobile family plan account has four lines. On Oct. 23, Rendon discovered her phone bill had extra $18 charges for each of three out of the four phone lines, and all four lines were also charged $3.49 for a “Regulatory Programs & Telco Recovery Fee,” said the complaint. She learned when she "renewed her phones" that she was also signed up for an add-on device protection insurance plan without her knowledge or consent, it said.

Rendon, a Spanish speaker, wasn't offered any brochures or documents in Spanish when she bought additional phones via a transaction in store on a tablet, the complaint said. The sales representative didn’t explain that insurance was being added to the plan or that there were documents she had to sign; nor did the rep explain she would be charged the recovery fee.

When Rendon reviewed billing statements for the previous 18 months, she discovered she was charged an extra $18 for each of the most recently purchased phones, bumping her monthly bill by $54, plus $13.96 for the four phones’ recovery fees, all without her consent, the complaint said.

T-Mobile paid incentives and bonuses to their sales reps to sell the add-on services, alleged the complaint. The incentive program “increased the opportunity of fraud and undue influence that the insurance is inseparable from the particular cell phone service plans,” the complaint said. The sales reps sold and put add-ons on the plan without explaining them to Rendon or other minority groups it targeted, “particularly Hispanics,” the complaint said. They told minority customers that “insurance is a requirement” and was part of a bundle that includes insurance with the phone, it said.

Sales reps “control the buttons” on the tablet used to sign contracts with customers that include add-ons, such as insurance, without their knowledge, said the complaint. The defendants should have known that consumers trust them based on the representations made when the sale was made and that they “rarely look closely at the bills” they receive afterward, it said.

The phones were advertised as “free” at the time of sale, “but in fact they were not free,” said the complaint. T-Mobile charged Rendon for the following 24 months, providing a company credit. But if the phone is lost or stolen, the customer is “left with the 24 months balance but without company credit,” it said. Even if the consumer "loses the phone on day one, he or she remains liable to Defendants for the balance,” it said. Sales reps did not explain that information to Rendon, it said.

The regulatory fee's existence is mentioned to customers for the first time on their monthly billing statement, which they receive “only after they sign up for the service and are financially committed to their purchase,” the complaint said. Defendants “deliberately hide” the regulatory fee in the billing statements and “bury” it in a portion of the bill that makes it likely customers won’t notice it, the complaint said. The regulatory fee is listed under the heading “Taxes & Fees Breakdown, misleadingly suggesting that the Regulatory Fee is akin to a tax or another standard government pass-through fee, when in fact it is simply a way for Defendants to advertise and promise lower rates than they actually charge,” it said.

Rendon claims violation of the Unfair Business Practices Act, conversion, negligence, breach of implied covenant of good faith and fair dealing, fraud and concealment. She seeks a permanent injunction enjoining defendants from false advertising and requiring them to “disclose to the public in advance the true prices consumers will pay if they sign up for Defendants’ wireless services, including the disclosure of the services consumers are being subscribed to and their right to decline any Add-ons, or as the Court otherwise deems just and proper.” She also seeks compensatory damages, costs of the suit and attorneys’ fees, plus pre- and post-judgment interest. T-Mobile didn't comment Friday.