AT&T Mobility Settles Charges Related To Third Party Billing (T)

The Federal Trade Commission and AT&T have announced a settlement of $105 million will be paid by AT&T to settle charges that the company allowed third parties to bill customers unlawfully. The settlement amount will go towards paying an FTC fine of $5 million, $20 million in penalties and fees to 50 states and the District of Columbia and refunding customers that were unlawfully billed for the charges $80 million. The unauthorized charges were often for items like ringtones and text messages with love tips and horoscopes. The practice is often called cramming.

Even when customers complained about the charges, AT&T failed to help them. The complaint alleged that AT&T refused to stop the charges because the company was making nearly 35 percent on each charge billed to the customers. It is estimated that the affected customers were ultimately billed hundreds of millions of dollars in unauthorized charges. Unfortunately, many companies are starting to view the fines and refunds as the cost of doing business, often making much more on the practices than they are ultimately required to repay.

AT&T was also accused of telling the third parties that were initiating the unauthorized charges that they would only provide refunds of up to two months’ worth of charges regardless of how long the unauthorized charges existed on customers’ bills. This would lower the refund amount for all of the companies involved. Some AT&T customers had these charges added to their bills for years without noticing.

AT&T Mobility is currently one of the country’s largest mobile phone companies. In December 2013, AT&T announced that it would no longer bill for third party services offering Premium Short Messaging Services. The company claimed that it had rigorous protections in place to guard consumers against unauthorized billing, but discontinued third party billing anyway.

The FTC complaint was originally filed in federal court in Atlanta. This settlement amount is the largest so far for these types of cramming charges. Any customers that believe that they were wrongfully billed for P.S.M.S. services can get a refund from the company under the settlement.