Attorney General J.B. Van Hollen Announces National $105 Million Cramming Settlement with AT&T Mobility

Oct 8 2014
Attorney General J.B. Van Hollen Announces National $105 Million Cramming Settlement with AT&T Mobility

 

MADISON — Attorney General J.B. Van Hollen announced today that his office, along with his counterparts in the other 49 States and the District of Columbia, and the Federal Trade Commission and the Federal Communications Commission, have reached proposed settlements with AT&T Mobility LLC that will resolve allegations that AT&T billed many of its cellular customers for charges from third-party service providers that the customers had not authorized—a practice known as “cramming.”  The proposed settlement imposes a comprehensive set of requirements on AT&T designed to address the cramming problem, and requires AT&T to pay a total of $105 million.

 

The Complaint filed today by the Wisconsin Department of Justice alleges that AT&T Mobility, until at least sometime in early 2014, charged many of its customers for other services offered by third-party merchants that were unrelated to the mobile telephone services AT&T provides.  According to the Complaint, the charges at issue included monthly fees, typically $9.99 per month, for third-party “premium” text message subscription services (a “Premium Short Message Service” or “PSMS”) for such things as horoscopes, trivia and sports scores.  It further alleges that in numerous instances, AT&T placed charges on Wisconsin consumers’ mobile telephone bills for third-party services without the consumer’s knowledge and which the consumers did not order or authorize.  The Complaint alleges that billing consumers for consumer goods or services that the consumer has not agreed to purchase violates Wisconsin consumer protection law. 

 

AT&T Mobility was among the four major mobile carriers—in addition to Verizon, Sprint and T-Mobile—that announced that they would cease billing their customers for commercial PSMS charges.  AT&T Mobility is the first mobile telephone provider to enter into a national settlement to resolve allegations regarding cramming.

 

Under the terms of the settlements, including the Consent Judgment submitted today by the Wisconsin Department of Justice for the Dane County Circuit Court’s consideration, AT&T Mobility is required to provide $80 million to be used to pay refunds to consumers who were charged for third-party services they did not authorize.  The fund will be administered by the Federal Trade Commission.  AT&T also agreed to pay a total of $20 million to the States and the District of Columbia and $5 million to the Federal Communications Commission.  Wisconsin will receive $308,994.42 from the settlement. 

 

Beginning today, present and former AT&T mobile telephone consumer subscribers can submit claims under the AT&T Mobility cramming refund program by visiting www.ftc.gov/att. On that website, consumers can find information about how to obtain a refund.   If consumers are unsure 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.

 

Under the Consent Judgment submitted to the Dane County Circuit Court for its consideration, AT&T Mobility will no longer make available to consumers the option to purchase products through commercial PSMS—the platform to which law enforcement agencies attribute the lion’s share of the mobile cramming problem.  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, or implement reasonable practices to confirm consumers’ express informed consent is appropriately collected and documented for third-party charges, and must implement a system where the consumer or the primary account holder, for multiline accounts, is sent a purchase confirmation separate from the bill of every third-party charge that will appear on their bill;

-          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, and may only deny a refund if it has information demonstrating the consumer provided express informed consent to the third-party charge and offers to provide and provides the consumer with that information upon request, or if the charge was incurred more than six years prior to the consumer contacting AT&T and AT&T was in compliance with the third-party purchase confirmation provisions of the settlement with respect to the charge;

-          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.

 

The State of Wisconsin is represented by Assistant Attorney General Phillip D. Ferris.  Copies of the Complaint and Consent Judgment submitted to the Court are available at the following links:

Consent Judgment

Summons and Complaint