October 13, 2014
The issue of cramming has recently taken center stage in the mobile industry, in light of scandals involving top U.S. carriers AT&T and T-Mobile.
In the most recent case, AT&T was slammed last week with a record-breaking settlement of $105 million from the FTC*, following allegations that the carrier was billing customers for unwanted services.
This is reminiscent of the scandal from earlier this year, in which the FTC claimed that T-Mobile profited from bogus charges for unwanted “premium” text message services on customers’ bills.†
Mobile cramming, according to the FTC, is a scam in which consumers’ phone bills are used as a vehicle for unauthorized charges placed by third-party companies.
Earlier this year, a U.S. Senate committee officially ruled that mobile cramming is a pervasive activity, prompting an initiative from the FTC to crack down on cramming cases.
In addition, experts speculate that the federal government “began getting wise to it” thanks to excessive outrage from consumers. For example, AT&T customer service was bombarded with some 1.3 million complaints in the course of a single year.*
In the case of AT&T, customers were billed hundreds of millions of dollars in unauthorized charges — typically in amounts of $9.99 a month — for ringtones, celebrity gossip, horoscopes and other subscriptions provided by outside companies. The federal government said that AT&T then concealed its charges, making it near impossible for customers to decode what they were being charged for. In the end, AT&T allegedly kept at least 35 percent of the charges.*
T-Mobile faced the same charges, with the FTC accusing the “UnCarrier” of burying these charges deep in users’ bills and refusing to refund customers’ money when they complained. The FTC alleges that T-Mobile kept as much as 40 percent of the money from these fees, generating hundreds of millions of dollars in profits.†
Thanks to the legal settlement, AT&T customers may be entitled to a portion of the record-breaking $105 million penalty…
If you believe you were hit with some of these unauthorized charges, you can submit a refund claim at http://www.ftc.gov/att or call 877-819-9692. All claims must be filed by May 1, 2015.
Going forward, customers must give consent before AT&T can add third-party charges to a billing statement, under terms of the agreement. Customers also will be informed of any charges separate of the bill.*
* Cetera, Mike. AT&T to pay $105M cramming penalty, Bankrate.com. Bankrate, Inc.
† Luckerson, Victor. ‘Cramming’ Suit Could Mean Big Trouble for T-Mobile, Time.com. Time, Inc.