By Mike Persley
WASHINGTON (Oct. 8, 2014)—AT&T Mobility has agreed to pay a $105 million settlement for charging customers for third party services they had not agreed to pay for, quietly slipping additional fees into their monthly telephone bills, a process known as mobile “cramming.”
The mobile service provider is said to have made millions by charging a $9.99 per month fee to customers for services such as subscriptions for ringtones, text messages containing love tips, horoscopes and “fun facts,” all the while strengthening their refund policy to prevent customers from receiving their money back when they complained.
The settlement was announced Wednesday by officials from the Federal Trade Commission, the Federal Communications Commission, Maryland Attorney General Doug Gansler and Vermont Attorney General Bill Sorrell.
“This isn’t Phil’s Phone Shack we’re talking about,” Gansler said of AT&T, the United States’ second largest mobile phone service provider. “We’re talking about millions of consumers who were frankly duped by this conduct.”
It’s the largest settlement against mobile cramming to date.
Under the settlement, the Federal Trade Commission will receive $80 million to provide refunds to consumers the company unlawfully charged. A link is provided on the commission’s website where customers can go to submit a claim.
An additional $20 million will be paid as a penalty to attorneys general in all 50 states and the District of Columbia. Maryland will receive $788,000 of the fees. The Federal Communications Commission will receive $5 million of the settlement.
“For too long consumers were being charged on their phone bills for things they did not buy,” said Tom Wheeler, chairman of the Federal Communications Commission. “It stops today for AT&T.”
The Federal Trade Commision has opened seven cramming cases against phone service providers since 2013, two against mobile carriers. A case against T-Mobile is ongoing.
As a requirement for settlement, AT&T must notify its current customers who were billed for third-party charges and tell them of the refund program. They must also dedicate a section of their bill specifically to third-party charges, so customers know what they’re paying for.
“We receive so many of these complaints as a result of mobile cramming,” said Gansler. “What’s more troubling is how many we didn’t receive because people are getting these bills with $9.99 charges. Most people don’t review their bill with that kind of due diligence.”