AT&T Fined $105M for 'Cramming' Cell Phone Bills

By Todd R. Weiss  |  Posted 2014-10-08 Print this article Print
AT&T cramming fine

Douglas F. Gansler, the state attorney general for Maryland, said that while many consumers did complain about the unauthorized charges on their bills, many other consumers likely never even noticed the charges and paid them without a whimper. "What's troubling is how many complaints we didn't receive," he said. "People are getting these bills with $9.99 charges for data use or something they have no understanding [about them]. Most people don't review their bills with that type of diligence and don't report companies like AT&T and others. This isn't Phil's Phone Shack doing this, and if you think about 20 million people at $9.99 a month, we're talking very, very large numbers and about many, many consumers who were frankly duped by this insidious, fraudulent conduct perpetrated by AT&T and other mobile companies."

In an email reply to an inquiry from eWEEK about the settlement, Mark Siegel, executive director of media relations for AT&T, acknowledged the conclusion of the case. "Today, we reached a broad settlement to resolve claims that some of our wireless customers were billed for charges from third-parties that the customers did not authorize," Siegel wrote. "This settlement gives our customers who believe they were wrongfully billed for [Premium Short Message Services] the ability to get a refund."

Siegel wrote, "While we had rigorous protections in place to guard consumers against unauthorized billing from these companies, last year we discontinued third-party billing for PSMS services."

As part of the settlement, AT&T will also be required to implement procedures that will prevent such billings in the future, Ramirez said, including obtaining informed consent from customers for any such fee-based services they wish to add to their phone serves. That means that customers will have to choose to take such services through several steps that will prove their intent. AT&T will also have to notify all customers who may have been wrongly billed and advise them of the settlement and about how they can seek refunds.

AT&T Mobility had been including charges for third-party services on customer phone bills until January 2014, the FTC said.

The AT&T cramming case is the sixth enforcement action against a phone carrier for alleged cramming and slamming violations this year, according to the agencies.

AT&T is not the only major carrier to be facing potential cramming charges in the United States.  In July, T-Mobile responded to an FTC complaint which accused T-Mobile of making bogus charges on customers' bills. In a complaint filed July 1, the FTC charged T-Mobile with "making hundreds of millions of dollars by placing charges on mobile phone bills for purported 'premium' SMS [Short Message Service] subscriptions that, in many cases, were bogus charges that were never authorized by its customers."

The FTC believes that T-Mobile received 35 to 40 percent of the total amount of charges for things like "flirting tips … or celebrity gossip," which typically came at a cost of $9.99 per month.

In response to the FTC's allegations, T-Mobile called the complaint "without merit."

In November 2013, all four major cell phone companies—AT&T, Sprint, T-Mobile and Verizon—said they were working with federal and state legislators to crack down on mobile cramming, eWEEK reported at the time.


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