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AT&T to pay feds $700,000 to settle overcharging dispute

The Federal Communications Commission announced Tuesday it has reached a $700,000 settlement with AT&T over claims that the carrier overcharged wireless data customers.

CNET/Marguerite Reardon

AT&T has agreed to pay $700,000 to the federal government to resolve complaints that that the company switched certain consumers to its mandatory monthly wireless data plans even though it had promised they could retain their existing pay-as-you-go data plans, the FCC announced Tuesday.

AT&T has agreed to refund excess charges paid by these "grandfathered subscriber," which could be as much as $25 to $30 a month, depending on data use, the Federal Communications Commission said in a press release. AT&T began transferring customers to to its monthly data plans in November 2009 shortly after the carrier required first-time smartphone subscribers and existing subscribers that upgraded their devices to enroll in the mandatory monthly data plans.

Previously, AT&T had allowed its smartphone customers who had pay-as-you-go data plans or customers who had disabled their network data to keep their old pay-as-you-go data plans when the company made monthly plans mandatory in 2009. But the FCC said that its investigation showed that some consumers who replaced these phones under warranty or insurance, or who moved to a new residence were switched to the monthly plans, even though AT&T had said they could keep their old plans.

The FCC started investigating AT&T over these practices last year as a result of consumer complaints. And the agency reached an agreement with AT&T that it announced Tuesday in a consent decree.

"Today's action sends a clear signal that wireless carriers can't wrongfully charge consumers,'' FCC Chairman Julius Genachowski said in a statement. "These strong FCC accountability measures will ensure customers are not over-charged. I am pleased that AT&T is taking the appropriate steps to resolve this issue."

Michele Ellison, chief of the FCC's Enforcement Bureau, urged AT&T subscribers to check their bills closely and contact the company if they feel they have been wrongly overcharged for wireless data.

Under the terms of the consent decree, AT&T will make a voluntary payment in the amount of $700,000 to the U.S. Department of Treasury. And it will refund individual customers affected by these changes. AT&T has also agreed to an extensive compliance plan, which includes: consumer notification, training of customer care representatives, and periodic compliance reports to the FCC. AT&T must also conduct additional searches of its records to identify improperly switched consumers and ensure appropriate refunds.

Marty Richter, a spokesman for AT&T, downplayed the significance of this agreement. He said that the consent decree involved less than 0.03 percent of its wireless customers, who inadvertently had a monthly data plan added to their account after getting a new smartphone through a warranty or insurance exchange or after relocating. He added that AT&T had already discovered and corrected the issue by Nov. 2010, and had given refunds to customers who contacted AT&T.

"Based on a review of our refund process, we believe a vast majority of those customers affected by the billing error have already been made whole," Richter said. "But as part of the decree we'll be providing a bill-page notice to affected customers, offering refunds, and giving them the option to return to a data pay-per-use plan, or to have a data block applied to their phone."

Updated 6 p.m. PT:This story was updated with statements from AT&T.