T-Mobile is renowned for its revolution against cellular phone contracts, a customer loyalty trap made possible by required two-year agreements we all have with our mobile carriers. In fact, T-Mobile’s growth can largely be attributed to this market disruption model that has jettisoned them to be the fourth largest US mobile carrier. The company is even being considered for an acquisition by Sprint with a $50 billion valuation.
The populist brand of T-Mobile is under assault though as the Federal Trade Commission and the Federal Communications Commission announced a lawsuit and ongoing investigation into T-Mobile’s “cramming” practice by which customers unwittingly or unknowingly are signed up for and pay for third party cell phone services such as ring tones, wallpaper, and such.
Gautham Nagesh of The Wall Street Journal describes the FTC lawsuit as follows:
The complaint alleges T-Mobile continued to charge consumers for the services "even after large numbers of consumers complained about unauthorized charges." The complaint said T-Mobile typically retained 35%-40% of the amount charged to consumers, receiving a larger percentage of proceeds from the services that were mostly likely to generate demands for refunds from consumers.
T-Mobile CEO John Legere responded in an article in USA Today with this comment:
T-Mobile CEO John Legere called the FTC's complaint "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."
Legere said that "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."
Though it may seem a stretch (is T-Mobile caught red-handed here?), let’s suppose that the third parties are at fault in this case, or T-Mobile settles with the FTC and FCC down the road to resolve this crisis. The problem that will linger for T-Mobile is that, as the populist renegade among mobile carriers, the company will have to address obvious damage to its brand image. After all, the allegations against the company go to the heart of its identity as the mobile consumer’s best friend.
Whatever the outcome of the lawsuit, the company better act fast to keep its legions of customers on its side. CEO Legere got off to a good with his initial statement to the media, but he has much more work to do. Here are a few steps T-Mobile should take now to begin to head off this major assault on its credibility and reputation.
Speak directly to customers
People are going to have to be convinced that they can still trust T-Mobile. CEO Legere should tape a series of video messages delivered directly to customers via e-mail, kiosks in T-Mobile retail stores, on the company website, and elsewhere to assure them that the allegations are unfounded and to describe in detail the steps that have been taken to address and manage customer complaints.
Engage social media and community relations heavily
Social media is the proving ground for reputational attacks against companies accused of wrongdoing. T-Mobile should be very aggressive in countering attacks and disproving rumors and falsehoods about the company online. The company should also conduct message training for all company personnel to address the issue directly with customers, vendors, neighbors, and even friends at church. The T-Mobile workforce is an army of goodwill ambassadors that should be engaged in a massive truth squad offensive.
Enhance the customer service program
Whatever proactive program is in place since 2013 to provide customers full refunds for bogus charges should be enhanced immediately. If there were 100 operators in a phone center taking calls before, there should be 1,000 phone operators taking customer calls now. The program should be structured to go over the top in addressing customer concerns and delivering refunds in rapid fashion. This is likely the primary interface that T-Mobile has with disgruntled and skeptical customers and it has to be run perfectly in order to keep its customer base loyal.
Applying these steps will likely stem the damage that is being inflicted on T-Mobile’s brand image right now and into the future.
These measures must be engaged to prompt independent observers to give T-Mobile the benefit of the doubt until the federal government proves its case. It can also help to persuade customers that though they think T-Mobile may be guilty, the mobile carrier is worthy of a second chance because of how well the company is managing customer complaints and refund requests since the government announced its lawsuit, and because T-Mobile is still the champion of mobile customers everywhere.
T-Mobile needs to prove that it is still the mobile consumer’s champion before the company is defeated via public opinion and faces a long comeback trail from this reputational train wreck.