AG Gansler Announces $105 Million Cramming Settlement with AT&T Mobility

Consumer refunds available for unauthorized premium text message services

Baltimore, MD (Oct. 10, 2014) - Attorney General Douglas F. Gansler announced today that his office's Consumer Protection Division, along with the Attorneys General of the other 49 states and the District of Columbia, the Federal Trade Commission, and the Federal Communications Commission, reached settlement with AT&T Mobility, LLC that include a $105 million payment. The agreement resolves allegations that AT&T Mobility placed charges for third-party services on consumers' mobile telephone bills that had not been authorized by the consumer, a practice known as “mobile cramming."

“Mysterious fees started showing up on consumers' bills for services they never signed up for," said Attorney General Gansler. “This settlement provides refunds for overcharged consumers and puts in place tough standards to prevent unauthorized charges from appearing on consumers' bills."

Consumers who have been “crammed" often complain about charges -- typically $9.99 per month -- for “premium" text message services (also known as “PSMS") such as horoscopes, trivia, and sports scores that they never heard of or requested. The attorneys general and federal regulators allege that cramming occurred when AT&T Mobility placed charges on consumers' mobile telephone bills for these services without the consumer's 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 -- Verizon, Sprint and T-Mobile are the others -- that agreed last fall to cease billing their customers for commercial PSMS charges.

Under the terms of the settlement, AT&T Mobility is required to provide $80 million to pay refunds to consumers who were victims of cramming. The fund will be administered by the Federal Trade Commission. Additionally, AT&T Mobility agreed to pay $20 million to the Attorneys General, of which Maryland will receive about $788,000, and $5 million to the Federal Communications Commission.

Beginning today, consumers can submit claims under the AT&T Mobility cramming refund program by visiting www.ftc.gov/att. Consumers unsure if they are eligible for a refund can visit the claims website or contact the Claims Administrator at 1-877-819-9692 for more information.
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 require AT&T Mobility to take a number of steps designed to ensure that it only bills consumers for third-party charges that have been authorized, including the following:

• 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 this 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; and
• 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.

Maryland was one of seven states on the executive committee that helped negotiate the agreement. Attorney General Gansler thanked Consumer Protection Division Deputy Chief Philip Ziperman and Assistant Attorney General Patrick McCormally for their work on this case.