Attorney General Kamala D. Harris Announces Cramming Settlement with AT&T Mobility
SAN FRANCISCO – Attorney General Kamala D. Harris, along with the Attorneys General of the other 49 States and the District of Columbia, the Federal Trade Commission, and the Federal Communications Commission, today announced a settlement with AT&T Mobility LLC to resolve allegations that AT&T Mobility placed charges for third-party services on consumers’ mobile telephone bills that had not been authorized by the consumer, a practice known as “mobile cramming.” The settlement covers “mobile cramming” charges made from January 1, 2009 through the date the FTC federal court order is entered.
Under the settlement, AT&T will pay $927,536 to California. In addition, AT&T Mobility is required to provide $80 million in funds to be used to pay refunds to consumers who were victims of cramming. The fund will be administered by the Federal Trade Commission.
"Consumers deserve transparency in their billing and a clear description of the services being provided," Attorney General Harris said. "This settlement holds AT&T accountable for its misleading practices and refunds consumers for unfair billing."
Beginning today and continuing until May 1, 2015, consumers can submit claims under the AT&T Mobility cramming refund program by visiting www.ftc.gov/att. On the website, consumers can find information about how to obtain a refund. If consumers are unsure about whether they are eligible for a refund or to request previous billing records, they can visit the claims website or contact the Claims Administrator at 1-877-819-9692 for more information.
Consumers who have been “crammed” often complain about charges, typically $9.99 per month, for “premium” text message subscription services (also known as “PSMS” subscriptions) such as horoscopes, trivia, and sports scores, that the consumers have never heard of or requested. The Attorneys General and federal regulators allege that cramming occurred when AT&T Mobility placed charges on consumers’ mobile telephone bills for these services without the consumer’s knowledge or consent. A sample bill attached to the release demonstrates where a consumer can find cramming charges.
AT&T Mobility is the first mobile telephone provider to enter into a national settlement to resolve allegations regarding cramming; AT&T Mobility was among the four major mobile carriers—in addition to Verizon, Sprint and T-Mobile—that announced it would cease billing their customers for commercial PSMS charges last fall.
The settlement also requires AT&T Mobility to stay out of the commercial PSMS business—the platform to which law enforcement agencies attribute the lion’s share of the mobile cramming problem to date. Additional terms require AT&T Mobility to take a number of steps designed to ensure that it only bills consumers for third-party charges that have been authorized, regardless of the platform in the future, including the following:
- AT&T Mobility must obtain consumers’ express consent before billing consumers for third-party charges, and must ensure that consumers are only charged for services if the consumer has been informed of all material terms and conditions of their payment;
- AT&T Mobility must provide a full refund or credit to consumers who are billed for unauthorized third-party charges at any time after this settlement;
- AT&T Mobility must inform its customers when the consumers sign up for services that their mobile phone can be used to pay for third-party charges, and 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 them from AT&T Mobility’s charges, and must include in that same section information about the consumers’ ability to block third-party charges.
AT&T Mobility also agreed to pay $20 million to the Attorneys General overall, and $5 million to the Federal Communications Commission.