It’s one of the more cynical gotchas consumers face, and finally, a big mobile phone company is paying the price. AT&T has agreed to pay $105 million to settle charges that it enabled, and profited from, massive phone bill cramming.
In cramming, consumers unknowingly signed up for useless text-message services and other products that around cost $10 per month. AT&T kept about one-third of the fee, the FTC said. Making matters worse, the charges are hard to spot on complicated cellphone bills.
The Federal Trade Commission says AT&T played the middleman in cramming schemes, helping third-party firms bill consumers and refusing to give consumers refunds beyond two months, even when facing a deluge of complaints.
“The FTC’s investigation into AT&T showed that the company received very high volumes of consumer complaints related to the unauthorized third-party charges placed on consumer’s phone bills,” the FTC said. “For some third-party content providers, complaints reached as high as 40% of subscriptions charged to AT&T consumers in a given month. In 2011 alone, the FTC’s complaint states, AT&T received more than 1.3 million calls to its customer service department about the charge.”
AT&T knew the charges were bogus, and the company was even warned internally about the questionable practices, the FTC said.
“In February 2012, one AT&T employee said in an email that ‘cramming/spamming has increased to a new level that cannot be tolerated from an AT&T or industry perspective,’ but according to the complaint, the company did not act to determine whether third parties had in fact gotten authorization from consumers for the charges placed on their bills. In fact, the company denied refunds to many consumers, and in other cases referred the consumers to third parties to seek refunds for the money consumers paid to AT&T.”
AT&T has been ordered to refund consumers who suffered cramming. It must also pay a $20 million fine to state attorneys general, and $5 million to the Federal Trade Commission.
Consumers who believe they were charged by AT&T without their authorization can visit www.ftc.gov/att to submit a refund claim and find out more about the FTC’s refund program under the settlement. If consumers are unsure about whether they are eligible for a refund, they can visit the claims website or contact the settlement administrator at 1-877-819-9692 for more information.
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