AT&T Agrees To Pay $105 Million to Settle Wireless ‘Cramming’ Charges

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In what the FCC said was its largest enforcement action in its history, AT&T Mobility will pay $105 million to settle an investigation that the company billed customers tens of millions of dollars for unauthorized premium text messaging services, such as horoscopes, celebrity gossip and even “love alerts.”

The settlement was announced at a press conference with FCC chairman Tom Wheeler, FTC chairwoman Edith Ramirez, Vermont Attorney General William Sorrell and other regulators.

The FCC said that their enforcement bureau had received complaints that AT&T Mobility refused to issue refunds or would only refund one or two months of charges from third party text messaging services. The charges also included services for ringtones, wallpaper and even texted flirting tips. The charges were typically $9.99 per month, a practice that the FCC calls “cramming” because it is often not immediately apparent what the charges are on their bills.

“Carriers should be on notice that we will not tolerate any business practice that saddles consumers with unauthorized charges on their phone bills,” Wheeler said.

The settlement was negotiated in coordination with the FTC and attorneys general in all 50 states and the District of Columbia. AT&T Mobility will pay $80 million to be distributed to current and former customers. The company also will pay $20 million to state governments, and a $5 million penalty payment to the U.S. treasury.

The settlement also requires that AT&T Mobility no longer offer commercial third party “premium SMS” charges and to obtain express consent from customers before putting third-party charges on their bills. They also must revise billing practices to make sure that third-party charges are “clearly and conspicuously” identified on their bills.

Wheeler indicated that more enforcement actions are pending against wireless providers. “Stay tuned,” he told reporters on Wednesday. The FCC said that it has taken six enforcement actions this year against carriers for such “cramming,” with $20 million in proposed penalties.

In July, the FTC charged T-Mobile with hundreds of millions of dollars in charges for premium text messaging that in many cases were bogus fees. T-Mobile called the complaint “unfounded and without merit” and that that it had stopped billing for premium text messaging in 2013 and is offering full refunds to any customer who believes they were wrongly charged.

The enforcement action comes as AT&T is seeking FCC approval for its proposed merger with DirecTV. Wheeler declined to specify whether this enforcement action would have an impact on its review. “We look at these issues as they are presented to us,” he said, adding that the merger would be decided “on those merits.”

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  1. John Shea says:

    Amen to all commenters!

    Note to Variety:-
    Please do not minimize massive telephone fraud by calling it ‘cramming’ as if it were just another everyday event.

    Note to FCC chairman Tom Wheeler and FTC chairwoman Edith Ramirez:-
    You should have sent these AT&T thieves to jail. In any case, there should be NO question of your allowing them to gang up with others.

    Note to President Obama:-
    You may need new FCC and FTC chairpersons.

  2. rgold02 says:

    I am one of those customers & I pay for three phones. I have had to call numerous times to ask about extra charges over the past fifteen years and get them to reverse the charges they hoped I would not see! Justice is served. I will be waiting for my check in the mail.

  3. ChrisM says:

    Wow, where is the usual disclaimer that the company will pay the multi-million dollar fine but denies any guilt or wrongdoing? Seems that ATT’s lawyers overlooked that one very important detail or did Variety simply fail to report it? Certainly nobody expects America’s largest phone company to admit they actually knew what was going on within their own company while all that unearned easy millions were pouring in. But let a low level employee take home a ballpoint pen and they’d be looking for a new job.

  4. John Shea says:

    So, a group of people stole over a hundred million dollars from another group of people, but nobody’s going to jail, or even resigning.

    An individual would be jailed for life for stealing a million or less. Yet when many individuals conspire together to steal hundreds of millions all they risk is a monetary ‘settlement’ which may be LESS than the amount they stole and kept.

  5. Michael Anthony says:

    Its not enough! You can bet that if they settle for $105m, their profits were much higher than that. As part if the settlement, AT&T should be required to state how much they earned if those charges.

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