Washington State Attorney General Bob Ferguson today said AT&T has agreed to pay $105 million in part to reimburse customers affected by cramming practices.
Under the deal, AT&T will pay $80 million to the Federal Trade Commission which will then distribute the money to customers nationwide who got stuck with unauthorized third-party fees from premium SMS services. Ferguson’s office estimates almost 500,000 Washingtonians were affected.
“I will not tolerate this deceptive billing practice,” Ferguson said in a statement. “Any company that allows unauthorized charges to be hidden in the fine print of a consumer’s telephone bill will have to answer to my office.”
AT&T has also agreed to cover the cost of the investigation, pay to the FCC a $5 million penalty, and shell out $20 million to the attorneys general. The Attorney General’s Consumer Protection Division says it worked with the attorneys general of all 49 other states and the District of Columbia as well as the FTC and the Federal Communications Commission in settling with AT&T.
According to the press release, AT&T is the first nationwide carrier to enter into this type of national settlement over cramming. But all four major U.S. carriers last fall agreed to stop premium SMS services.
AT&T has also agreed to break out third-party charges on phone bills, obtain consent from customers before charging, and to refund all future unauthorized third-party charges.
Other Tier 1 carriers in the U.S. are being pursued over cramming practices as well.
The FTC and FCC are investigating T-Mobile and alleging the carrier made “hundreds of millions” from fraudulent charges.
The FTC accused T-Mobile of taking in 35 to 45 percent of the revenue from SMS services like that typically charges $10 monthly, also alleging the carrier kept it up even after it had reason to believe the charges were fraudulent.
T-Mobile CEO John Legere called the complaints “unfounded and without merit.”
The FTC’s complaint is seeking to “permanently prevent T-Mobile from engaging in mobile cramming and to obtain refunds for consumers and disgorgement of T-Mobile’s ill-gotten gains.”
