AT&T will pay the US government a fine of $105 million to settle charges over a practice known as mobile cramming.
Announcing the fine and settlement on Wednesday, the Federal Trade Commission stated allegations that AT&T had billed its customers hundreds of millions of dollars in charges for subscriptions that came from other companies. Such subscriptions included ringtones and text messages that contained love tips, horoscopes, so-called fun facts. As part of its complaint, the FTC claimed that AT&T held onto at least 35 percent of the amount that it charged its customers.
Mobile cramming is the practice of adding charges to a mobile bill from third-party companies without the knowledge or consent of the subscriber. The FTC has been aggressive in going after companies that it believes are guilty of the practice. This was the agency's seventh case involving mobile cramming since 2013. The FTC filed ain a case that has yet to be resolved.
AT&T must now pay $80 million to the FTC -- money that will serve as refunds to customers who were hit by the unauthorized charges. The carrier will pay out an additional $20 million in penalties to 50 states and to Washington, D.C., and a $5 million penalty to the Federal Communications Commission.
"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," FTC Chairwoman Edith Ramirez said in a statement. "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."
In its complaint, the FTC charged that AT&T's bills to consumers exacerbated the problem by not making it clear which charges were directly from the carrier and which ones came from the third parties.
As part of the settlement with the FTC, AT&T must inform all affected customers of the settlement. The company must get the consent of any customer before it can add any such third-party charges to the bill. AT&T must also clarify on its bills which charges are from the third parties and give people the option to prevent such charges from being adding to their bill.
AT&T commented on the settlement of the case in the following statement shared with CNET:
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.
AT&T customers who believe they received the unauthorized charges can go to ftc.gov/att to submit a refund claim or call 877-819-9692 for more information.