AT&T and the FTC have come to a settlement agreement over accusations of cell phone cramming. Federal and state regulators announced Wednesday that AT&T has agreed to pay $105 million for “cramming” unauthorized charges on the monthly bills of its wireless customers. The African-American Cyber Report reported on this accusation in March of this year when we wrote; “Cell Phone Scams:Are Black People Paying Too Much?“
For those of you who do not know what cramming is it is the unauthorized billing of customer accounts for services they are unaware of or did not authorize. AT&T is accused of profiting from unauthorized cramming.
AT&T is charged with keeping as much as 35% of the fraudulent third party fees on its customers phone bills. The charges averaged about $10.00 per month and came from services for things like trivia, horoscopes and love tips. AT&T is also accused of concealing the charges on bills thus preventing customers from securing full refunds.
A similar lawsuit was filed by the FTC in July against T-Mobile. In the lawsuit the FTC alleged the carrier earned massive sums from third-party merchants offering bogus services. There have been seven cases related to mobile cramming in the past year, and FCC chairman Tom Wheeler said more were coming.
The settlement is the largest cramming settlement in history. The federal agencies involved in the settlements include the Federal Communications Commission, the Federal Trade Commission, as well as all 50 states plus the District of Columbia.
“This case underscores the important fact that basic consumer protections — including that consumers should not be billed for charges they did not authorize – are fully applicable in the mobile environment,” FTC chairwoman Edith Ramirez said.
AT&T all but admitted to cramming customer bills in a statement saying that it and a number of wireless carriers had offered the third-party “Premium Short Messaging Services” in the past few years.
“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.”
“For too long, consumers have been charged on their phone bills for things they did not buy,” Wheeler said. “It’s estimated that 20 million consumers this year are caught in this kind of trap, costing hundreds of millions of dollars.”
Of the $100 million settlement approximately $80 million is set aside for customer refunds. So if you’re an AT&T cell customer you need to go here to check and see if you have money coming your way.
Breaking It Down
Ok, so AT&T got fined $100 million dollars. But lets ask this question, who inside AT&T knew about this and let it go on for so long? How was it that all that money was flowing through AT&T and no one asked where it was coming from. They kept as much as 35% of the charges remember? This is a clear example of the criminal justice system not prosecuting corporations. AT&T knew what was happening and did nothing except collect the cash. I guarantee you that some executive got a bonus for bringing in that money. But was anyone charged with criminal fraud? No, and they probably won’t be. And why is that? AT&T had revenue in excess of $128 billion dollars in 2013. Do you think they really felt that $100 million settlement.? The only way to stop this type of crime, white collar crime, is to put people behind bars. How many black men are in prison for stealing $100? I think you get what I’m saying?