AT&T to pay $105M to settle cramming charges

WASHINGTON — AT&T Mobility has agreed to pay $105 million to settle claims the technology giant placed unauthorized charges on customer bills.

The settlement is between AT&T and the Federal Communications Commission, Federal Trade Commission, and the Attorneys General of all 50 states and the District of Columbia.

In a news conference, FTC Chairwoman Edith Ramirez says AT&T billed customers for charges for subscriptions to ringtones, horoscopes and text messages, in what is known as cramming.

Generally, the charges for $9.99 showed up on bills as “data usage,” says Maryland attorney general Doug Gansler.

Even after customers complained, Ramirez says AT&T didn’t stop the practice for years.

“AT&T continued to make hundreds and millions of dollars,” says Ramirez.

“It stops today for AT&T,” says FCC chairman Tom Wheeler.

Under the agreement, customers will immediately be able to begin filing claims.

“Starting today, consumers can go to the FTC’s website and seek a refund if they believe they are eligible,” says Ramirez.

Gansler says he’s struck by the number of victims.

“It’s 20 million people at $9.99, we’re talking about many, many consumers who were frankly duped by this insidious, fraudulent conduct that was perpetrated by AT&T.”

In a statement, Virginia attorney general Mark Herring encouraged all customers to check their bills and submit claims if unauthorized charges appear.

D.C. attorney general Irvin Nathan says “consumers should be able to sign up for and receive cell phone services without having to be on guard for unexpected and unwanted charges on their cell phone bills.”

Under the agreement, AT&T has to obtain customers’ consent before billing them for third-party charges.

AT&T spokesperson Elyssa Rae says “In the past, our wireless customers could purchase services like ringtones from other companies using Premium Short Messaging Services — PSMS — and we would put those charges on their bills. Other wireless carriers did the same.”

Rae says AT&T had proactively made changes to its procedures.

“While we had rigorous protections in place to guard consumers against unauthorized billing from these companies, last year we discontinued third- party billing for PSMS services.”

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