AT&T to Pay $105 Million Settlement for Phone Bill 'Cramming'
AT&T (T) has agreed to pay $105 million to settle charges brought by the federal government and all 50 states that the telecommunications giant placed unauthorized charges from third-party service providers on its customers' bills. One state attorney general said what AT&T did amounted to picking the pockets of consumers.
Of the $105 million, $80 million will go to the Federal Trade Commission to provide refunds to AT&T Mobility consumers; $20 million covers penalties and fees paid to 50 states and the District of Columbia; and $5 million is penalty to the Federal Communications Commission. Signs are other similar settlements could follow.
In 2011 alone, the company received more than 1.3 million complaints from consumers who found these charges, also known as "cramming," on their bills. A typical charge was $9.99 a month for such services as horoscopes, trivia and sports scores -- none of which the customers had signed up for, the FTC said on Wednesday.
Likened to Pickpocketing
"This case underscores the important fact that basic consumer protections -– including that consumers should not be billed for charges they did not authorize -- are fully applicable in the mobile environment," FTC Chairwoman Edith Ramirez said.
"No one is above the law, including powerful multinational corporations," New York Attorney General Eric T. Schneiderman said. "Illegal cramming raises cell phone bills for consumers and picks the pockets of ordinary New Yorkers."
The four major carriers -- AT&T, Verizon (VZ), Sprint (S) and T-Mobile (TMUS) -- last year all said they would stop billing for the sort of premium texting services that have been linked to cramming complaints. AT&T is the first to reach a national settlement over the complaints.
How You'll Be Notified
Under the settlement, AT&T is required to notify all of its customers who had unauthorized third-party charges on their bills that the company reached this settlement and refunds are available. The notification must be made by text message, e-mail, paper bill insert and notification on an online bill. Former customers might hear from the administrator of the settlement, the FTC said.
And, going forward, AT&T must get a customer's express approval before any third-party charge can be put on their bill. Those charges have to be made clear on the bill and customers must also have the choice to block such charges in the future.
If you think AT&T put an unauthorized charge on your bill, you can file a claim on the FTC's AT&T claim site until May 1 of next year.