Attorney General Mark Herring announced today that along with the attorneys general of the other 49 States and the District of Columbia, the Federal Trade Commission (FTC), and the Federal Communications Commission his office has reached a $105 million settlement with AT&T Mobility, LLC (AT&T Mobility.)
The settlement resolves allegations that AT&T Mobility placed unauthorized charges for third-party services on consumers’ mobile telephone bills without the consumers’ knowledge or consent, a practice known as “cramming.” Consumers who have been “crammed” often complain about charges, typically $9.99 per month for “premium” text message subscription services (also known as PSMS) that they never heard of or requested, such as for horoscopes, trivia, and sports scores. AT&T Mobility is the first mobile telephone provider to enter into a national settlement to resolve allegations regarding cramming.
“This settlement sends a strong message that deceptive billing practices will not be tolerated in any context and no business should try to slip charges by Virginia consumers,” Attorney General Herring said. “I am pleased that we were able to reach a fair and reasonable agreement with AT&T Mobility that will provide for direct refunds to Virginians, and will help protect consumers from unauthorized third-party billing in the future. I also encourage all Virginians to closely examine billing statements and the terms and conditions associated with any service to which they subscribe. We all know those agreements can be long and tedious, but it’s really important that consumers know what they’re agreeing to before they sign up.”
Under the settlement, AT&T Mobility is required to pay $80 million to the FTC, which the FTC will use to pay restitution directly to consumers who were charged for unauthorized, third-party services. Consumers will automatically receive notices through the refund program, or they can submit claims and get more information about the AT&T Mobility cramming refund program by visitingwww.ftc.gov/att. If consumers are unsure about whether they are eligible for a refund, they can visit the claims website or contact the Claims Administrator at 1-877-819-9692 for more information.
AT&T Mobility also agreed to pay $20 million to the participating state attorneys general and $5 million to the Federal Communications Commission as a penalty and to pay for the costs of the investigation. The Commonwealth of Virginia will receive $356,779.21 for its participation in the settlement, in addition to a presently unknown amount of restitution directed to Virginia consumers who were improperly charged.
In addition to restitution and penalties, the settlement requires AT&T to make changes to its practices to ensure consumers’ rights are protected. AT&T has agreed to stay out of the PSMS business-the platform to which law enforcement agencies attribute the majority of the cramming problem. AT&T, along with the three other major mobile carriers (Verizon, Sprint and T-Mobile) previously announced last fall that they would cease billing their customers for PSMS. Additional terms require AT&T Mobility to take a number of important steps to ensure that it only bills consumers for third-party charges that have been authorized. These steps include:
– AT&T Mobility must obtain consumers’ express consent before billing the consumers for third-party charges, and AT&T Mobility must ensure that consumers only are charged for services if the consumer has been informed of all material terms and conditions of their payments;
– AT&T Mobility must provide consumers who are billed for unauthorized third-party charges at any time after this settlement a full refund or credit;
– When consumers sign up for services, AT&T Mobility must inform the consumers that their mobile phones can be used to pay for third-party charges. AT&T Mobility also must inform consumers of how those third-party charges can be blocked if the consumer doesn’t want to use their phone as a payment method for third-party products; and
– AT&T Mobility must present third-party charges in a dedicated section of consumers’ mobile phone bills, must clearly distinguish third-party charges from AT&T Mobility’s charges, and must include in that same section information about the consumers’ ability to block third-party charges.