The US government is slapping down AT&T for allowing extra charges on customers' phone bills with what it calls the "largest cramming settlement in history." The news was announced on Wednesday in a joint press conference held by the FCC, the FTC, and all state attorneys general, who worked together on the resolution. That resolution concerns what's known as "mobile cramming," in which third parties can pass charges along to phone companies for spam SMS messages or things like daily horoscopes and "fun facts." Federal investigators found that for years, AT&T made hundreds of millions of dollars by taking 35 percent of these unwanted charges, dodging complaints from customers and reassuring the companies themselves.
"Wireless companies profited while their customers were fleeced."
AT&T will pay a total $105 million to settle the case. $80 million of that will go to the FTC, which it will use to set up a reimbursement program for cheated customers. $20 million will go to individual states, and the FCC will get $5 million. In addition, AT&T will have to end the program and proactively inform subscribers if extra fees are going on their accounts. While this settlement is unusually large, it's not the first time regulators have taken on cramming. Earlier this year, they went after T-Mobile for similar wrongdoings.
These charges usually came in the form of a recurring monthly fee of $9.99 once an AT&T customer signed up for a premium texting service, intentionally or otherwise. Though the FCC and FTC found that AT&T did identify these charges on customers' billing statements, the product descriptions were sometimes as vague as "Variety Texts." AT&T received complaints that these charges were unauthorized, and it's alleged that AT&T was at times unable to provide proof that they had been. Even so, AT&T is also said to have only refunded some customers one or two months worth of fees. "We now know that wireless companies profited while their customers were fleeced by unscrupulous third parties who added millions of dollars in unauthorized charges to consumer phone bills," Travis LeBlanc FCC enforcement bureau chief, says in a statement.
AT&T has expressed some contrition in a statement. "While we had rigorous protections in place to guard consumers against unauthorized billing," it said, "last year we discontinued third-party billing for PSMS services." Now, it says that the "broad settlement" will help settle accounts with angry customers. "This settlement gives our customers who believe they were wrongfully billed for PSMS services the ability to get a refund." AT&T is also being required to develop and implement a system that will ensure customers provide informed consent before third-party charges are placed on their bills in the future.