The FCC, FTC and 50 states and the District of Columbia have all had a part in a historic settlement with AT&T over the practice of billing customers for unauthorized services and then refusing full refunds, or cramming.
Specifically, AT&T Mobility was the settling party, agreeing to pay $105M, which FCC Chairman Tom Wheeler said was the largest enforcement action in agency history.
The FCC explained, “The Enforcement Bureau launched its investigation after receiving consumer complaints alleging that AT&T customers had been billed with months of unauthorized charges for third-party services that they did not request. In some cases, complaints alleged that AT&T Mobility refused to issue refunds or would only refund one or two months’ worth of such charges, leaving consumers on the hook for the rest. Until January 2014, AT&T Mobility included charges for third-party services – such as monthly subscriptions for ringtones, wallpaper, and text messages providing horoscopes, flirting tips, celebrity gossip, and other information – on its customers’ telephone bills. The charge for each of these types of subscriptions was typically $9.99 per month.”
Said Wheeler, “Today’s enforcement action is a victory for consumers nationwide. Carriers should be on notice that we will not tolerate any business practice that saddles consumers with unauthorized charges on their phone bills. This settlement –a joint effort between the FCC, FTC and all 50 states and the District of Columbia – is a prime example of government agencies working together on behalf of American consumers.”
Sen. Jay Rockefeller (D-WV), who also has been investigating such behavior, also weighed in, saying, “Today’s wireless cramming settlement speaks volumes about the diligent and determined work of the FTC, FCC, and Attorneys General around the country to combat billing fraud on consumers’ phone bills, and I congratulate them on this effort. As my recent Senate Commerce Committee investigation demonstrated, despite years of industry assurances that wireless cramming was a ‘de minimis’ problem, bogus charges on wireless bills have been widespread and have caused consumers substantial harm. Self-regulation has proved ineffective at protecting consumers against both landline and wireless cramming, and I urge the enforcement community to remain vigilant as third-party wireless billing practices continue to evolve.”
$80M of the payment will go to customer restitution, $20M to the states and $5M will go directly into the US Treasury.
RBR-TVBR observation: What’s the broadcast angle on this? It’s simple.
AT&T’s proposed merger with DirecTV is under regulatory review, and there is no shortage of people expressing the opinion that the deal will not be good for consumers.
Are regulators going to want to turn over billing for satellite video subscriptions to a company with an extremely spotty record when it comes to billing practices for its mobile service?
Seriously, is this going to give AT&T a significant hurdle to overcome in regards to gaining merger approval? Or does this settlement amount to an agreement to put the matter into the past and move on with the merger review as though nothing happened?
Once again, time will tell! And it shouldn’t take all that long, either. Stay tuned.
