FTC Settlement Calls For AT&T To Refund Millions To Customers For Third-Party Charges

Chuck Bednar for redOrbit.com – Your Universe Online
AT&T’s wireless business will pay $105 million in penalties and refunds as part of a settlement over charges the telecom company was unlawfully billing wireless customers with millions of dollars in bogus charges.
The settlement, announced by the US Federal Trade Commission (FTC) on Wednesday, will require AT&T Mobility LLC to pay $80 million to state and federal regulators so they can provide refunds to consumers who were unlawfully billed by the company as part of a practice known as cramming.
In addition, the settlement will require the company to pay $20 million in penalties and fees to all 50 states and the District of Columbia, and a $5 million penalty to the Federal Communications Commission (FCC). The charges stem from third-party services such as horoscope texts or flirting tips that customers never asked for, according to the Associated Press (AP).
The fees, which the AP explained were usually small (approximately $9.99 per month), were listed on wireless bills as ‘AT&T Monthly Subscriptions,’ which gave customers the impression that the fees were associated with services provided by the wireless carrier. The FTC has set up a website for those customers who believe they might have been fraudulently charged, or who believe they may be eligible for a refund.
“I am very pleased that this settlement will put tens of millions of dollars back in the pockets of consumers harmed by AT&T’s cramming of its mobile customers,” FTC Chairwoman Edith Ramirez told Consumer Affairs founder and editor James R. Hood. “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.”
According to Adi Robertson of The Verge, US government officials called it the “largest cramming settlement in history,” and that the investigation into the incident found that AT&T made hundreds of millions of dollars over the course of several years by taking a 35 percent cut from those unsolicited charges and ignoring consumer complaints.
AT&T told New York Times reporter Edward Wyatt that it discontinued billing for those types of third-party charges last December, and in a statement the company stated it had “rigorous protections in place to guard consumers against unauthorized billing from these companies.” The company added that the settlement was reached “to resolve claims that some of our wireless customers were billed for charges from third parties that the customers did not authorize.”
The FTC said the case was part of a larger effort to combat the practice of mobile cramming, and that it was the agency’s seventh mobile cramming case since 2013 and its second this year. The commission said that it filed a complaint against T-Mobile (the case is ongoing), and that it also issued staff report on the practice, both in July.
“The FTC mobile cramming cases build on the FTC’s extensive law enforcement work over the last decade to combat cramming on landline phone bills,” the agency said in a statement. Officials said that the AT&T investigation showed that the telecom provider had received “very high volumes” of complaints from customers as a direct result of the unauthorized charges, including more than 1.3 million customer service calls in 2011 alone.
Under terms of the settlement, the FTC said AT&T must notify all current customers who were billed for the unauthorized third-party charges of the refund program by text message, e-mail, paper bill insert and notification on an online bill. In addition, the company is required to obtain express, informed consent from subscribers before placing any future third-party charges on a consumer’s mobile phone bill, and all such charges must be clearly identified.
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