October 15, 2014
By Stephanie West
New York, NY – Attorney General Eric Schneiderman along with the Attorneys General of 49 other states and the District of Columbia, reached a $105 million settlement with AT&T Mobility LLC. The settlement resolves allegations that AT&T Mobility placed on consumers’ mobile telephone bills charges for third-party services that had not been authorized by consumers, a practice known as “cramming.”
One common cramming charge is a $9.99-per-month premium text message subscription service (also known as PSMS) for horoscopes, trivia, and sports scores that consumers often never requested.
“No one is above the law, including powerful multinational corporations, and I am pleased the settlement with AT&T Mobility protects consumers against being billed for services they did not request,” said Attorney General Schneiderman. “Illegal cramming raises cell phone bills for consumers and picks the pockets of ordinary New Yorkers.”
The Attorneys General and federal regulators allege that cramming occurred when AT&T Mobility placed charges on consumers’ mobile telephone bills for text-based services—provided not by AT&T, but by an independent third party—without consumers’ 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 customers for PSMS last fall.
The settlement requires AT&T Mobility to pay $20 million to states and the District of Columbia to pay restitution to consumers, who were charged for third-party services they did not authorize, and $5 million in penalties and legal costs to the Federal Communications Commission. The settlement also requires AT&T Mobility to take steps designed to ensure that it bills consumers only for third-party charges that have been authorized.