Approximately 45,000 Vermonters, who collectively lost an estimated $1 million, will benefit from a global settlement reached by 50 states, the District of Columbia, the Federal Trade Commission, and the Federal Communications Commission with AT&T Mobility LLC, Vermont Attorney General Bill Sorrell announced today. The settlement resolves allegations that AT&T Mobility placed charges for third-party services on consumers’ mobile telephone bills that had not been authorized by the consumers, a practice known as “mobile cramming.”
AT&T Mobility agreed to pay $105 million to settle the claims; $80 million is to be used to pay refunds to consumers who were victims of cramming; $20 million will be paid to the states and $5 million to the Federal Communications Commission. In addition to restitution that will be paid to Vermonters from the settlement, the State of Vermont will receive over $1.61 million for its role as the lead state in the state consumer protection enforcement action.
“I’m pleased that AT&T will no longer facilitate fraud by placing bogus charges on their customers’ phone bills, and that about 45,000 Vermonters will have the opportunity to recover their money,” said Attorney General Sorrell. “I hope that—going forward—the mobile telecommunications industry pays as much attention to its customers’ welfare as it does to its bottom line. I trust it knows by now that if it doesn’t, law enforcement will be at its doorstep.”
AT&T Mobility is the first mobile telephone provider to enter into a 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 they would cease billing their customers for commercial PSMS charges last fall.
Consumers who have been “crammed” received wireless phone bills that included charges, typically $9.99 per month, for “premium” text message subscription services (also known as “PSMS” subscriptions) such as horoscopes, trivia, and sports scores, that the consumers had never heard of or requested. The Attorneys General and federal regulators allege that cramming occurred when AT&T Mobility placed charges on consumers’ mobile telephone bills for these services without consumers’ knowledge or consent.
The Federal Trade Commission will administer the AT&T Mobility cramming refund program. Beginning today, Vermonters can submit claims by visitingwww.ftc.gov/att. On that website, consumers can find information about how to obtain a refund. If consumers are unsure as to 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.
The settlement also requires AT&T Mobility to stay out of the commercial PSMS business—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 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 they 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.
Vermont Attorney General Bill Sorrell was joined by officials from the Federal Trade and Federal Communications Commissions in announcing the settlement in Washington, DC today.
Vermont AG: Oct 8, 2014