Ohio AG announces national $105 million cramming settlement with AT&T Mobility

Ohio AG announces national $105 million cramming settlement with AT&T Mobility

OHIO (WOIO) - On Wednesday, October 8, Ohio Attorney General Mike DeWine, along with other state attorneys general and federal agencies, announced a national settlement with AT&T Mobility LLC to resolve allegations that it placed unauthorized third-party charges on consumers' cell phone bills in a practice known as "mobile cramming."

As part of the settlement, AT&T Mobility has agreed to pay $105 million, of which $80 million will be used for consumer refunds.

Hundreds of thousands of Ohioans may be affected by the settlement, which was reached by the attorneys general of all 50 states and of the District of Columbia, as well as the Federal Trade Commission and Federal Communications Commission.

"We urge consumers to check their cell phone bills for unauthorized charges," Attorney General DeWine said. "Phone bill 'cramming' can be a costly problem — small charges, undetected by consumers, can add up over time. This settlement provides restitution for AT&T customers who have experienced unauthorized third-party charges on their cell phone bills, and it helps prevent these charges in the future."

Consumers who have been "crammed" often complain about 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 have 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 the consumers' knowledge or consent. Last fall, AT&T Mobility and the three other major mobile carriers — Verizon, Sprint and T-Mobile — announced they would cease billing their customers for commercial PSMS charges.

Under the terms of the settlement, AT&T Mobility is required to provide $80 million in funds to be used to pay refunds to consumers who were victims of cramming. The funds will be administered by the Federal Trade Commission.

Beginning today, consumers 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 about 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. Claims will be accepted until May 1, 2015.

The settlement 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 they have 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 at the time 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 consumers don'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.

AT&T Mobility also agreed to pay $20 million to the attorneys general and $5 million to the Federal Communications Commission. Ohio will receive $419,609.35.

A copy of the Ohio settlement (an Assurance of Voluntary Compliance) can be found on the Ohio Attorney General's website.

AT&T Ohio issued the following statement:

"In the past, our wireless customers could purchase services like ringtones from other companies using Premium Short Messaging Services (PSMS) and we would put those charges on their bills. Other wireless carriers did the same.

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.

Today, we reached a broad settlement to resolve claims that some of our wireless customers were billed for charges from third-parties that the customers did not authorize. This settlement gives our customers who believe they were wrongfully billed for PSMS services the ability to get a refund." 

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