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How consumers can fight back against big wireless

CNET's Marguerite Reardon takes a look at a startup that could allow wireless customers who are prohibited from filing class-action lawsuits to hold big companies like AT&T accountable when they violate their contracts.

Wireless customers are tired of paying for unlimited data service that isn't really unlimited. But what can they do to make their wireless provider give them the service they pay for?

That's the question I answer in this edition of Ask Maggie. The Federal Communications Commission and the Federal Trade Commission have each said they will take action against AT&T for its policy of slowing down service for its heaviest data customers. But for individuals who want to either get their money back or to make AT&T offer them truly unlimited service, there isn't much they can do.

Wireless customers can no longer join together in a big class action lawsuit to force companies to change their business practices. But one lawyer says he has found a loophole in the law that could allow consumers to join forces and take action.

Dear Maggie,

I've been reading your coverage of carriers who throttle unlimited data customers. I'm an unlimited data customer from AT&T. And my service has regularly been throttled. I am definitely one of the people whose service has been slowed to the point where I can't even use it. I know that the FCC is fining AT&T and the FTC is suing them. But is there anything I can do to get my money back? Why haven't there been any class action lawsuits against AT&T?


Fed up with AT&T

Dear Fed up with AT&T,

Thanks to a Supreme Court decision in 2011, which upheld a company's right to include a clause in contracts prohibiting subscribers from suing the company as part of a class action, you only have a couple of options to fight AT&T's policy: You could enter into an AT&T-funded arbitration program or file a suit in small claims court.


Because all four major wireless carriers in the US include arbitration-only clauses in their contracts, wireless customers, in particular, are more vulnerable to potential abuses by large companies. And in a market where more than 90 percent of the population subscribes to wireless service, that means that millions of consumers no longer have access to a full range of legal options when their carrier breaks the law.

But there may be a third option available to you. Of course, there are also a few caveats you need to be aware of before you sign on.

Let's first go through the traditional options that are available.

Arbitration: You could sign up for AT&T's arbitration program, which is paid for by the company. It is a legitimate legal process, but if you are not happy with the outcome, you can't appeal the decision and you effectively waive your right to any other settlements having to do with your case.

Small claims court: You can also sue AT&T in small claims court. Some subscribers have seen success with this approach. In 2012, Matt Spaccarelli, a truck driver from California, sued AT&T in small claims court for slowing down his service. He ultimately won $850. But going this route may cost you more than you'd win in a settlement or a verdict. Depending on the state you live in, the cost of simply filing your claim could set you back between $50 and $150. Then there's the time it will take to prepare your case. Time is money, even if you're doing your own legal work.

If you do try to hire a lawyer, even someone just out of law school will likely charge you $150 or $200 an hour. Bigger firms' rates could skyrocket to $400 or $500 or more an hour. For a claim where you might get $60 or $100 back, it just isn't worth it to try to sue AT&T.

This is exactly why AT&T and the other three major wireless carriers put these arbitration clauses in their contracts. It simply isn't economical for individuals to sue carriers who allegedly violate the terms of their contracts.

CrowdSuit: There may be a third option you want to consider. Ben Kinney, a Chicago-based lawyer, says he has found an alternative to company-sponsored arbitration and having individuals sue large companies in small claims court themselves. Last year, he launched a company called CrowdSuit, which will fight the legal battle for consumers. He is working with the Minneapolis, Minnesota-headquartered law firm Robins Kaplan to sue AT&T on behalf of individual consumers who say their unlimited data service was slowed on AT&T's network.

Here's how it works. Kinney explained that the legal claims individuals have against AT&T can be viewed as personal property. Under the law, an individual can assign this claim or property to someone else, such as CrowdSuit, who could fight the claim in court on that individual's behalf. Once someone signs over their rights to file individual legal claims to CrowdSuit, the company aggregates the claims and takes the offending company to court.

Assigning legal claims to others who will fight your legal battle for you is done all the time in the insurance industry. When you are involved in a car wreck and it's not your fault, your insurance company sues the other driver's insurance company on your behalf. Kinney said he is taking that same concept and applying it to protect consumers.

CrowdSuit is currently gathering claim assignments from AT&T unlimited data customers, and then it will bundle claims together into groupings. It will then file multiple suits in small claims court in Minnesota, where the firm it's partnering with is headquartered. The advantage of this approach is that it doesn't violate the waiver that bans class action lawsuits, because once the cases are assigned to CrowdSuit, the company is suing AT&T one on one. But because it's aggregating claims and doing the legal legwork to file cases for hundreds or even thousands of AT&T subscribers instead of filing a case for one individual at a time, the damages add up quickly, making it more effective than a one-off small claims suit.

Because small claims courts limit the amount of damages that can be awarded to each case, CrowdSuit is clustering the claims into smaller groupings and filing multiple cases to ensure the amount of damages awarded doesn't exceed the court's cap.

To get started, Kinney recommends going to the CrowdSuit website and assigning your claim to CrowdSuit. The company will need your name, email address, cell phone number, and mailing address. This information is needed in order for CrowdSuit to subpoena your phone records to prove its case. It says it will not share your information with third parties and will only use the personal information to obtain the information needed for the case.

The fine print:

Before you get too excited and give away your claim, there are a few things you should know.

CrowdSuit will sue AT&T on your behalf, but it will not return any damages it receives to you. Instead, the company allows you to choose from one of five charities, including Big Brothers and Big Sisters, Habitat For Humanity, and Greenpeace, to donate whatever award they win for you.

Kinney said that research shows that for amounts less than $100, few people ever redeem checks or coupons in class action settlements. And yet printing those checks and paying the postage necessary to send those checks costs money.

"Instead of writing a lot of little checks to individuals, who probably will never cash it, we will write big checks to charities on behalf of our clients," he said.

He added that the real purpose of bringing a suit against a big company like AT&T is to nudge them in the right direction.

"The biggest reason consumers file class action suits isn't necessarily to win a large award," he said. "It's to get the wrong-doer to modify their behavior."

Cases filed by individuals in small claims court aren't usually worth enough to get companies to change their behavior, he said. Take Matt Spaccarelli's $850 win against AT&T in 2012 as an example. Even after losing that case, the company continued to throttle or slow down customers using unlimited data plans until this year. Only recently has AT&T modified its policy. It now only slows down unlimited data customers when the network is congested.

Another thing to consider is that the FCC and the FTC have each announced plans to take action against AT&T on this issue. Last month, the FCC said it plans to issue a $100 million fine to AT&T for not adequately explaining its policy to its unlimited data customers. And late last year, the FTC filed a lawsuit against AT&T also claiming that customers weren't adequately informed of the change in policy.

AT&T has denied each of these claims. The company says it will fight actions taken against it.

If the FCC's fine stands up to court challenges, and the FTC is successful in its lawsuit, it could help CrowdSuit win its cases against AT&T. But the thing you should be aware of is that if AT&T reaches a settlement with the FCC and/or the FTC and consumers are offered reimbursement, you likely won't be eligible for that settlement if you've already given your claim to CrowdSuit. This might not matter much to you if you don't think you'd get paid much money anyway. But it is something to be aware of.

The bottom line:

You could fight AT&T yourself in small claims court over the unlimited data throttling policy. And you might win. But fighting AT&T yourself in small claims court or in arbitration takes time and resources. You could get CrowdSuit to fight your battle for you, especially if what you really want is to stop AT&T from slowing down your wireless service. If CrowdSuit is successful with this campaign, Kinney said the company will apply the same legal tactics to bring cases against other companies, looking to shield themselves from class action lawsuits.

"The Supreme Court in its decision granted a virtual license for companies to steal," Kinney said. "This approach allows consumers to hold large corporations accountable and to not allow them to use mandatory waivers to insulate themselves from liability."

Ask Maggie is an advice column that answers readers' wireless and broadband questions. If you have a question, I'd love to hear from you. Please send me an e-mail at maggie dot reardon at cbs dot com. And please put "Ask Maggie" in the subject header. You can also follow me on Facebook on my Ask Maggie page.