AT&T, one of the leading mobile providers in the US, has agreed that the company will pay an estimated US $105 million for billing unauthorized cellphone charges to their customers. This decision was based on the ruling imposed by the FTC (Federal Trade Commission) and FCC (Federal Communications Commission).
The breakdown of the fine includes US$80 million to the FTC which will issue the refunds to customers, US $20 million to state governments included in the settlement, and US$5 million penalty payment to the US treasury.
The “unauthorized charges” in this case refers to the hidden or monthly charges that come with the monthly subscriptions of customers. Such features include ringtones, wallpaper, text messages regarding horoscopes, entertainment news, and other information sent. Most customers who are receiving these types of information weren’t aware that they are billed for such services. Minimum charge is set at US $9.99 per month, and the highest can even reach US $60 per month.
Edith Ramirez, Chairwoman of the FTC, mentioned in the press conference that this is by far the largest cramming settlement and largest FCC enforcement in the history. She also mentioned that “for too long, consumers have been charged on their phone bills for things they didn’t buy. It’s estimated that 20 million consumers per year are caught in this type of [cramming] trap, [but] it stops today for AT&T.” Other mobile carriers like Sprint and Verizon are also being looked upon to follow the same ruling as AT&T.
As for AT&T, the company released a statement addressing the unauthorized charges and that they were aware of the situation, and there were rules that were supposed to be implemented to prevent this kind of situation. Despite that, the company has acknowledged the decision and described this decision as a way to resolve the issues regarding this. AT&T also mentioned in their statement that “this settlement gives our customers who believe they were wrongfully billed for PSMS [Premium Short Messaging Services] services the ability to get a refund.”
Affected AT&T customers who are seeking for a refund are advised to visit ftc.gov/att.