Wednesday, October 08, 2014

AT&T Pays $101 Million To Settle Phone Cramming Charges

1.4 Million Florida AT&T Mobile Phone Accounts Due For Refunds
Florida Attorney General Pam Bondi today announced a $105 million landmark 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.” 

More than 1.4 million Florida AT&T Mobility accounts could receive refunds under this settlement and all AT&T Mobility users will be affected by the terms of the agreement requiring AT&T Mobility to make changes to the way it handles third-party charges.

Attorney General Bondi’s Office was joined in this settlement by the attorneys general of the other 49 states and the District of Columbia, the Federal Trade Commission, and the Federal Communications Commission. AT&T Mobility is required to provide $80 million to pay refunds to consumers who were victims of cramming, and the fund will be administered by the Federal Trade Commission.

AT&T Mobility will pay $20 million to the attorneys general and $5 million to the Federal Communications Commission. Florida’s monetary share for participating in the settlement will be more than $1 million. Attorney General Bondi’s Office served on the Executive Committee, along with six other states, that negotiated this settlement.

"This is a major victory for our consumers who have the right to expect fair and accurate telephone bills," stated Attorney General Pam Bondi.

Consumers who have been “crammed” often complain about charges, typically $9.99 per month, for “premium” text message subscription services, also known as “PSMS” subscription, such as horoscopes, trivia, and sports scores, that the consumers have never heard of or requested.

AT&T Mobility is the first mobile telephone provider to enter into 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 November.

The settlement requires AT&T Mobility to stay out of the commercial PSMS business. 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, 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.

Florida was joined on the Executive Committee by the following states: Delaware, Maryland, Oregon, Texas, Vermont, and Washington.

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