AT&T has reached a $105 million settlement with federal regulators for illegally billing subscribers for horoscopes and celebrity gossip, among other unauthorized charges.
The settlement, aimed at a practice known as “cramming,” was announced at Wednesday press conference by the Federal Communications Commission, Federal Trade Commission and state attorneys general from Maryland and Vermont.
According to FTC chair Edith Ramirez, these “crammed” charges included services such as horoscopes and celebrity gossip delivered by text message to AT&T subscribers. Subscribers were charged $9.99 a month for these unauthorized services and billed in a way that made it difficult to tell that the charge was recurring. The billing also categorized these fees as under “AT&T Monthly Subscriptions” obscuring the fact that the crammed services were provided by third parties rather than AT&T.
Ramirez said that $80 million of the settlement money will be used to refund “affected customers” through a website created by the FTC. The rest of the settlement will be divided among the 50 states plus the District of Columbia and the FCC.
According to FCC Chairman Tom Wheeler, AT&T’s settlement is the seventh case of mobile cramming since last year.
UPDATE: AT&T has responded with the following statement
In the past, our wireless customers could purchase services like ringtones from other companies using Premium Short Messaging Services (PSMS) and we would put those charges on their bills. Other wireless carriers did the same.
While we had rigorous protections in place to guard consumers against unauthorized billing from these companies, last year we discontinued third-party billing for PSMS services.
Today, we reached a broad settlement to resolve claims that some of our wireless customers were billed for charges from third-parties that the customers did not authorize. This settlement gives our customers who believe they were wrongfully billed for PSMS services the ability to get a refund.
