Telecom giant AT&T will pay a hefty $105 million settlement after the government accused the company of unlawfully billing wireless customers for tens of millions of dollars in bogus charges — a practice known as cramming.
The Federal Trade Commission said Wednesday that AT&T Mobility LLC, a subsidiary of AT&T, billed millions of customers for charges from third-party companies for services people never asked to receive or were duped into subscribing to — things like horoscope texts or flirting tips. The fees were usually small — $9.99 a month — and were not easy for customers to find on their bills.
According to the FTC complaint, AT&T kept at least 35 percent of the unauthorized charges it imposed on customers, who will now be able to get their money back. The multi-agency settlement includes $80 million that will be paid to the FTC for consumer refunds.
An additional $20 million in penalties and fees will go to 50 states and the District of Columbia. Another $5 million will be paid to the Federal Communications Commission.
The third-party fees were listed on wireless bills as "AT&T Monthly Subscriptions," which the FTC said left customers thinking that the charges were part of services provided by AT&T.
Sometimes the third-party companies would randomly pick phone numbers of people to sign up for their ringtones or texts without their knowledge or consent. Other times, the third-party vendors might offer gift cards, telling would-be recipients that they need to enter a contest for the card by providing their cell number and then texting back a certain pin number. The vendors then began charging customers' phone accounts for recurring charges unrelated to the gift-card offer.
Under terms of the settlement, AT&T will now be required to get consumers' consent before placing any third-party charges on their bills.