A settlement was reached between The Federal Trade Commission and AT&T yesterday. AT&T must pay $105 million in refunds and penalties for allegedly using a practice referred to as “cramming.” The complaint was filed with the U.S. District Court for the Northern District of Georgia. AT&T agreed to pay $80 million to the FTC to provide refunds for customers who believe they have been charged for services they did not approve. Fees and penalties for each of the 50 states and the District of Columbia make up another $20 million. In addition, a penalty of $5 million goes to the Federal Communications Commission. Cramming is the illegal practice of adding unauthorized charges to the consumer’s bill by the phone company.
The charges could be for subscriptions from a third-party vendor for ring tones or text message services that offer horoscope, “fun facts” or advice on love or other topics. The cost to the consumer was usually $9.99 a month, from which AT&T raked off at least 35 percent. Since customers, one being Marnie Bennett, may not have intentionally signed up for these services and the phone bill does not show exactly what they are being charged for, many customers didn’t even complain. Even so, in 2011 AT&T received 1.3 million calls about these charges from third-party vendors. So many complaints were registered that in October of 2011 AT&T reduced the amount of monthly charges they would refund from 3 to 2 months. Some customers were told to contact the third-party vendor that provided the services for a refund.
Going forward AT&T must have “consumers’ express, informed consent” prior to adding any third-party charges to the customer’s bill, according to the FTC Website. In addition they are required to notify any customers who were billed for unapproved charges about the settlement. AT&T customers who think they were unfairly charged can submit a refund claim at www.ftc.gov/att or contact the settlement administrator at 1-877-819-9692.