AT&T Settles $105 Million for Unlawful Charges to Consumers
Chris Gilreath, Esq.
AT&T Inc. will pay $105 million to settle claims with the Federal Trade Commission (FTC), the Federal Communications Commission (FCC), all 50 states and the District of Columbia, that the company billed wireless customers unauthorized charges for services. $80 million will be used for customer refunds and the remainder will pay for state and federal fines.
The unauthorized charges were for services offered by another company, such as subscriptions for ringtones, wallpapers, and text messages containing flirting tips, horoscopes, and celebrity gossip. The practice, also known as third party billing or mobile cramming, is a lucrative scam on millions of consumers. Reportedly, AT&T kept about 35% of the charges.
The Federal Trade Commission said that AT&T had ‘strong reason’ to suspect unlawful charges, but kept them on customer’s bills anyway. The charges, usually in the amount of $9.99/month as “AT&T Monthly Subscriptions,”
added up to hundreds of millions of dollars. In 2011, the company received about 1.3 million calls to customer service regarding the charges.
Still, the AT&T defends that it currently has “rigorous protections” to guard consumers from unauthorized billing and stopped permitting third-party billing for certain services last year.
The issue of mobile cramming is not exclusive to AT&T, but spans across other wireless providers. The FTC sued T-mobile for similar reasons in July (which T-mobile also denies). The case against AT&T is the seventh mobile cramming case brought by the FTC since last year.
According to the FTC, AT&T needs to make charges clear and allow for consumers to consent or block them. If you believe you have been unfairly charged by AT&T, you can file a claim for a refund at www.ftc.gov. You must file your claim by May 1, 2015.
All data cited from: bloomberg.com.