AG Kane Announces $105 Million National Settlement with AT&T Mobility for ‘Cramming’

HARRISBURG, Pa. – Attorney General Kathleen G. Kane yesterday announced Pennsylvania, along with 49 states and the District of Columbia, the Federal Trade Commission (FTC) and the Federal Communications Commission (FCC), reached settlements with AT&T Mobility LLC that include $105 million in payments.

The settlement resolves allegations that AT&T Mobility placed unauthorized charges for third-party services on consumers’ mobile telephone bills, a practice known as “cramming.”

AT&T Mobility is required to provide the FTC $80 million in restitution that will be used to pay refunds to cramming victims. The amount of restitution for Pennsylvania consumers will depend upon the nature and number of claims submitted by consumers. The Bureau of Consumer Protection estimates the settlement could potentially benefit 920,000 Pennsylvania consumers.

In addition to the restitution amount to be paid, the Attorney General’s office will receive $442,441, a portion of which will cover the costs of participating in the investigation and settlement. The remainder will go to the Commonwealth’s general fund.

Consumers who have been “crammed” typically are charged $9.99 per month for “premium” text message subscription services (PSMS) that can include horoscopes, trivia and sports scores, without the consumer’s knowledge or consent.

Consumers can submit claims under the AT&T Mobility cramming refund program by visiting www.ftc.gov/att. Consumers who are unsure about their eligibility should call1-877-819-9692.

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 include:
• AT&T Mobility must obtain consumers’ express consent before billing consumers for third-party charges, and 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 the 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.

• 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.

Last fall AT&T Mobility, Verizon, Sprint and T-Mobile announced they would stop billing customers for commercial PSMS charges. AT&T Mobility is the first provider to enter into a national settlement to resolve cramming allegations.

The agreement was filed in the Commonwealth Court of Pennsylvania by Senior Deputy Attorney General John M. Abel and Deputy Attorney General Saverio P. Mirarchi of the Attorney General’s Bureau of Consumer Protection.


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