Bogus Cell Phone Charges. The Federal Trade Commission and the Federal Communications Commission announced that AT&T will pay $105 million for bogus cell phone charges, PCMag reports. The FTC will receive $80 million from the company for customers’ refunds. Information about refunds can be found at ftc.gov/att. Additionally, AT&T agreed to pay $20 million to state governments involved in the settlement as well a $5 million penalty payment to the U.S. Treasury.
According to the FTC, customers were being charged high fees for monthly subscriptions to features such as ringtones, wallpaper, text messages with horoscopes, flirting tips and celebrity gossip. Some charges were as high as $60 a month; most were $9.99 a month. The FTC said the charges were not shown on the phone bills, and many customers never agreed to the fee. The commission also said that AT&T, who received 35 percent of all sales, schemed with third-party companies to ensure that customers did not get refunds.
AT&T would ‘help lower refunds’
At a press conference on Wednesday, FTC Chairwoman Edith Ramirez said “AT&T told these companies that it would ‘help lower refunds’ by only providing refunds up to two months’ worth of charges,” She also said that “the carriers agreed to stop the premium text messaging services as of January 2014,” but the settlement “applies to all forms of billing…like direct-carrier billing, so this continues to be an issue.”
Under the settlement, AT&T agreed to only allow third-party billing when customers explicitly agree. The company is also changing its billing practices so customers can easily see what charges are being made and be able to block third-party services.
Several months ago, the FTC filed a lawsuit over bogus charges against T-Mobile. FCC Chairman Tom Wheeler suggests that other carriers may face similar litigation over so-called cramming charges. The AT&T settlement is both the largest FCC enforcement action in history, as well as the largest cramming settlement to date.
“For too long, consumers have been charged on their phone bills for things they did not buy,” said Wheeler. “It’s estimated that 20 million consumers per year are caught in this type of [cramming] trap, [but] it stops today for AT&T.”