AT&T will pay a $105 million fine to the Federal Trade Commission, $80 million of which will be given to customers as refunds.
The charges are related to a practice known as "mobile cramming," which includes charging customers on a recurring basis for things like ringtones and wallpapers. Much of the time customers did not agree to these charges. AT&T, in the meantime, according to the FTC, colluded with third-party providers of ringtones and wallpaper to make sure that customers did not get refunds, as AT&T got 35 percent of sales.
"I am very pleased that this settlement will put tens of millions of dollars back in the pockets of consumers harmed by AT&T's cramming of its mobile customers," said FTC Chairwomen Edith Ramirez. "This case underscores the important fact that basic consumer protections -- including that consumers should not be billed for charges they did not authorize -- are fully applicable in the mobile environment."
According to the original complaint, which was made in October 2011, AT&T reportedly changed its refund policy so that customer service representatives could only offer two months worth of refunds, regardless of how long the company had been falsely charging customers.
AT&T is not the only company to be accused of mobile cramming. The FTC is also going after T-Mobile on similar charges, however T-Mobile denies the charges. The FTC may also investigate other carriers like Verizon and Sprint. This is the seventh mobile cramming case that the FTC has taken part in since 2013, and the second against a mobile carrier this year.
The AT&T cramming settlement is the largest mobile cramming related settlement in history and is notable because of the fact that it is co-signed by 51 state attorneys.
"For too long, consumers have been charged on their phone bills for things they did not buy," said Wheeler in a statement. "It's estimated that 20 million consumers per year are caught in this type of trap, it stops today for AT&T."
AT&T also pointed to the fact that it made a pledge last year along with Sprint and T-Mobile to stop charging users for spam and "premium" text messages.
"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," said AT&T in a statement. "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."
Consumers who believe that they were falsely charged in relation to mobile cramming can submit a form to the FTC to claim a refund.
