Mobile Cramming Payout
The Federal Trade Commission has reached a settlement with Dallas-based AT&T for an unprecedented $105 million. The agreement stems from unauthorized charges that the telecommunications giant levied on consumer mobile phone bills.
In a statement, the FTC said that AT&T passed on "hundreds of millions of dollars in charges originated by other companies" for ringtones and text messages with "fun facts" and "love tips."
The Federal Trade Commission said it is the biggest settlement to date with a mobile phone carrier.
In these cases, the FTC found that AT&T signed up wireless customers for text messaging services without their knowledge. The individual charges were typically $9.99 and were lumped in with legitimate A&T service charges, making it difficult for consumers to detect.
For its part in the scheme with outside providers, AT&T is believed to have pocketed about 40 percent of the take.
Some of the actual text messages that were unwittingly costing customers money each month include such gems as, "Guess what? The placement of a donkeys eyes on its head enables it to see all four feet at all times!" The FTC declined to provide examples of the specific love tips and "flirty messages" that were sent to customers without their consent.
"I am very pleased that this settlement will put tens of millions of dollars back in the pockets of consumers harmed by AT&T's cramming of its mobile customers," FTC chairwoman Edith Ramirez said. "This case underscores the important fact that basic consumer protections — including that consumers should not be billed for charges they did not authorize — are fully applicable in the mobile environment."
Of the $105 million, $80 million will be used to provide consumer refunds, $20 million will be paid to 50 states and the District of Columbia, and $5 million will go to the Federal Communications Commission. The FTC said it is the biggest settlement to date with a mobile phone carrier.
AT&T wireless customers who believe they may have paid for unauthorized third-party charges can apply for their refund here.