AT&T is the latest mobile company to settle over charges of unwanted billing.
On Wednesday, AT&T agreed to pay $105 million to settle allegations that it put unauthorized third-party charges on cell phone bills, according to the Federal Trade Commission.
The FTC claimed that AT&T, the second-largest mobile provider in the US, was billing customers for unauthorized third-party charges, like daily horoscopes or love tips, a process known as cramming. Charges usually amounted to $9.99 a month, totaling hundreds of millions of dollars. The FTC found that AT&T kept at least 35 percent of the charges imposed.
AT&T will pay $80 million to refund customers and $20 in penalties and fees. Another $5 million will go to pay for penalties by the Federal Communications Commission.
“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,” Edith Ramirez, FTC chairwoman, said in a statement. “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.”
In the FTC's investigation, AT&T was found to have high volumes of customers complaining about unauthorized charges. "Complaints reached as high as 40 percent of subscriptions charged to AT&T consumers in a given month," according to the statement. In Oct. 2011, AT&T altered its refund policy so that refunds could only be offered for two months worth of charges, no matter how long the customer had been billed for unauthorized charges.
According to the FTC, one AT&T employee said that “Cramming/Spamming has increased to a new level that cannot be tolerated from an AT&T or industry perspective.” The employee went on to say that AT&T did not act to determine if the charges were authorized by customers and denied refunds to many customers.
"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. This settlement gives our customers who believe they were wrongfully billed for PSMS services [Premium Short Message Service] the ability to get a refund," an AT&T spokesman said in an e-mailed statement to Reuters.
AT&T is the seventh company to face cramming charges by the FTC since 2013. The agency brought charges against T-Mobile in July, but the US's fourth-largest mobile carrier denies the claims.
Under the settlement, AT&T must notify all customers who were billed for unauthorized charges. Customers who think they were wrongly billed can call 1-877-819-9692 or go to www.ftc.gov/att.