AT&T to Pay $105 Million to Settle Accusations of ‘Cramming’

AT&T will pay $105 million to settle accusations that it billed hundreds of millions of dollars in bogus third-party charges to its wireless subscribers. The settlement is the latest in a number of similar moves by regulators to curtail mobile “cramming” — the practice of charging fees for third-party services that subscribers did not order. A similar case against T-Mobile is still pending. The AT&T settlement marks the largest to-date against a specific carrier for cramming.

attIn addition, the settlement also represents the largest redress to consumers victimized by cramming as well as the largest enforcement action in FCC history.

The investigation and joint settlement was a collaborative effort of the Federal Trade Commission, Federal Communications Commission and 51 state attorneys general. The regulators plan to continue collaborating on future cramming investigations.

“For too long, consumers have been charged on their phone bills for things they did not buy,” FCC Chairman Tom Wheeler said. “It’s estimated that 20 million people a year are caught in this kind of trap… costing hundreds of millions of dollars. It stops today for AT&T.”

“The settlement stemmed from a complaint in which regulators accused AT&T of billing customers for horoscopes, ringtones, love tips and other third-party premium short message services, or PSMS, that they didn’t sign up for,” reports The Wall Street Journal. “The charges, typically $9.99 a month, were listed as ‘AT&T Monthly Subscriptions’ on consumer phone bills, leaving customers to believe they were paying for services from AT&T. Regulators said AT&T kept at least 35 percent of the charges.”

“While we had rigorous protections in place to guard consumers against unauthorized billing from these companies, last year we discontinued third-party billing for PSMS services,” said an AT&T spokesman.