ATTORNEY GENERAL ANNOUNCES NATIONAL $105 MILLION CRAMMING SETTLEMENT WITH AT&T MOBILITY

October 10, 2014

[Augusta] Attorney General Janet T. Mills announced today that the Maine Attorney General’s Consumer Protection Division has reached settlements with AT&T Mobility LLC to resolve allegations that AT&T Mobility placed charges for third-party services on consumers’ mobile telephone bills that had not been authorized by the consumer, a practice known as “mobile cramming.”

The settlement totals $105 million in monetary penalties to AT&T Mobility and will provide $80 million in direct consumer restitution in a fund administered by the Federal Trade Commission. AT&T Mobility will also be required to take specific steps to ensure that consumers are not subjected to these kinds of unauthorized charges in the future.

Consumers who have been “crammed” often complain about charges, typically $9.99 per month, for “premium” text message subscription services (“PSMS”) 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 consumer’s knowledge or consent. 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 it would cease billing their customers for commercial PSMS charges last fall.

“Anyone with a mobile phone these days could have unwittingly signed up for one of these services,” said Attorney General Mills. “We believe that the practice was deceptive and unfair to consumers. It is a reminder that people should read their monthly bills carefully and question any charges that they are unsure of. This practice could amount to millions of dollars in illegitimate fees being racked up on the backs of unsuspecting Maine consumers.”

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

Beginning immediately, consumers can submit claims under the AT&T Mobility cramming refund program by visiting www.ftc.gov/att to 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.

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 it 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 the consumers 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. AT&T Mobility also agreed to pay $20 million to the Attorneys General and $5 million to the Federal Communications Commission. The State of Maine received $225,210.65 for its participation in the settlement. The Attorney General’s Office estimates that approximately 96,000 Maine consumers are potentially impacted by the restitution program.

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