AT&T to refund $88M following cramming charges

AT&T began sending refunds on Thursday to settle cramming claims against it by the FCC. Image: ~Ealasald~/Flickr

The Federal Trade Commission said AT&T will hand over $88 million in refunds to more than 2.7 million customers who had charges from third parties added to their wireless bills.

The carrier agreed in 2014 to pay a $105 million penalty to settle an investigation by the FCC that concluded AT&T had billed customers for hundreds of millions of dollars in unauthorized subscriptions and premium SMS services. The settlement, which was the largest enforcement action in FCC history, was coordinated with the FTC and attorneys general of all 50 states and Washington, D.C., in an effort to crack down on mobile cramming.

Some of the penalty was paid to states and the FCC, with the remaining $88 million earmarked for a consumer refund program that the FTC would administer. The carrier also “significantly changed its process for third-party billing” under terms of the settlement, the FTC said.

“The refunds represent the most money ever returned to consumers in a mobile cramming case,” the FTC said in a press release. “Through the FTC’s refund program, nearly 2.5 million current AT&T customers will receive a credit on their bill within the next 75 days, and more than 300,000 former customers will receive a check. The average refund amount is $31.”

The unauthorized charges usually amounted to $9.99 a month for ringtones and text subscriptions for “love tips, horoscopes and ‘fun facts,’” the FTC said. AT&T was accused of keeping at least 35% of those charges.

AT&T began sending refunds—in the form of checks and phone bill credits—on Thursday to consumers who had filed claims with the FTC.

AT&T is far from the only U.S. carrier to be accused of cramming, of course. In November 2013, AT&T, Sprint and T-Mobile entered into an agreement with 45 states to stop billing customers for premium SMS messages they received. 

Verizon Wireless was not part of the settlement but said that it would also discontinue the practice. And T-Mobile paid $90 million in 2014 to settle an FCC investigation into allegations of billing customers for millions of dollars’ worth of unauthorized third-party subscriptions and premium SMS services.