AT&T To Pay $105 Mln To Settle "Wireless Cramming" Charges

(RTTNews) - The Federal Communications Commission on Wednesday announced a $105 million settlement with AT&T Mobility, a unit of AT&T Inc (T), to resolve an investigation into allegations that the company billed customers millions of dollars in unauthorized third-party subscriptions and premium text messaging services. The settlement is the largest enforcement action in FCC history.

The Enforcement Bureau launched its investigation after receiving consumer complaints alleging that AT&T customers had been billed with months of unauthorized charges for third-party services that they did not request. In some cases, complaints alleged that AT&T Mobility refused to issue refunds or would only refund one or two months' worth of such charges, leaving consumers on the hook for the rest.

Until January 2014, AT&T Mobility included charges for third-party services - such as monthly subscriptions for ringtones, wallpaper, and text messages providing horoscopes, flirting tips, celebrity gossip, and other information - on its customers' telephone bills. The charge for each of these types of subscriptions was typically $9.99 per month.

"Today's enforcement action is a victory for consumers nationwide," said FCC Chairman Tom Wheeler. "Carriers should be on notice that we will not tolerate any business practice that saddles consumers with unauthorized charges on their phone bills."

The settlement was negotiated in coordination with the Federal Trade Commission and the attorneys generals of all 50 states and the District of Columbia.

Under the terms of the Consent Decree the FCC announced today, AT&T Mobility will pay $80 million to be distributed to current and former AT&T customers who were billed for third-party services they did not authorize. In addition, AT&T Mobility will pay $20 million to state governments participating in the settlement, and will make a $5 million penalty payment to the U.S. Treasury.

The Enforcement Bureau has also secured strong consumer protections in the settlement that include requirements that AT&T Mobility no longer offer commercial third-party "premium SMS" charges, adopt processes to obtain express informed consent from customers prior to allowing third-party charges on their phone bills, revise their billing practices to ensure that third-party charges are clearly and conspicuously identified on bills so that customers can see what services they are paying for, and offer a free service for customers to block all third party charges.