AT&T 'Crammed' the Wrong Customer's Mobile Phone Bill

NEWS ANALYSIS: Companies as well as individuals should start auditing their cell phone bills to see if they are victims of "cramming"—the practice of padding bills with unauthorized charges.

ATT Cramming

If there was one really dumb move by AT&T in its history of placing unauthorized charges on customers' cell phone bills, it may have been to charge the official cell phone of the Vermont Attorney General William Sorrell with a premium text message service.

Sorrell was one of the people who took part in a press conference in Washington where the Federal Trade Commission and Federal Communications Commission jointly announced a record $105 million penalty against AT&T for cramming. Cramming is the practice of forcing charges on unsuspecting customers for such things as premium text messaging services.

A typical text messaging service that Sorrell mentioned in the Oct. 8 event was something called "Mobile Love Alerts." Unfortunately, because AT&T apparently disguised those services as routine AT&T charges, finding them was nearly impossible for most customers. It was only after Sorrell's staff started investigating that those charges turned up.

Despite the mistake, the much bigger problem was that AT&T apparently forced such added charges on millions of its customers. Worse, the carrier promised the third-party companies benefitting from these charges that they would do everything they could to limit refunds and prevent the true nature of the charges from being revealed, according to a statement by FTC chairwoman Edith Ramirez.

Eighty million of the settlement will be used to refund cramming charges suffered by customers. The other $25 million will go to the government to offset the costs of bringing up the charges and for other fines and penalties. The FTC has set up a Web page for customers seeking recovery of money lost in cramming.

The extent of the cramming problem is much larger than it may seem at first. According to FCC Chairman Tom Wheeler, the typical monthly cramming charge was $9.99, but in some cases the amounts were over $50. If your average company cell phone bill per user is around $100 per month, this could mean that 10 percent of your wireless communications costs are the result of fraudulent activity.

What this means is that you should ask your accounting staff to audit your company's wireless bills for dubious charges, keeping in mind that in some cases AT&T and perhaps other carriers deliberately concealed the true nature of the costs. You also need to know that while AT&T may have been the most egregious practitioner of this cramming activity, they weren't alone. The FTC is already suing T-Mobile for similar activity, and Ramirez said in the press conference that there were more such actions to come.

Ramirez also said that there were other types of third-party billing going on besides premium text messaging, so while you're auditing your wireless billing, you should check for those as well.

Wayne Rash

Wayne Rash

Wayne Rash is a freelance writer and editor with a 35 year history covering technology. He’s a frequent speaker on business, technology issues and enterprise computing. He covers Washington and...