AT&T Inc has agreed to pay a $700,000 fine and refund customers who had been overcharged on smart phone plans, after the Federal Communications Commission looked into complaints that the No. 2 U.S. wireless carrier may have switched users to costlier monthly subscriptions without their consent.
The company agreed to return excess charges paid by smart phone customers who were switched to a costlier, monthly subscription plan from a "pay-as-you-go" system, the commission said in a statement on Tuesday.
An AT&T spokesman said fewer than 0.03 percent of their customers had been mistakenly switched, an error discovered in 2010. It then reimbursed those who contacted the company.
"Based on a review of our refund process, we believe a vast majority of those customers affected by the billing error have already been made whole," the spokesman said.
The FCC began its investigation only last year. The switch resulted in additional fees of as much as $25 to $30 a month depending on usage, the industry regulator said.
This "puts precious dollars back in the pockets of consumer-- where they belong," said Michele Ellison, Chief of the FCC's Enforcement Bureau. "We strongly encourage AT&T subscribers to check their bills closely and contact the company if they spot any overcharges related to wireless data."
AT&T made monthly plans mandatory for first-time and upgrading customers in September 2009, while existing customers could stick with "pay-as-you-go" under a so-called grandfather clause. But according to the commission, some existing users who replaced phones through warranty or moved homes were switched to the more expensive programs.
As part of an agreement with the FCC, AT&T promised to better train its customer representatives, keep uses notified of changes, and go through its records to turn up potentially overcharged customers eligible for refunds.