AT&T Mobility Settles Wireless Cramming Investigation; Will Pay $105 Million

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The FCC’s Enforcement Bureau has announced it has entered into a Consent Decree with AT&T Mobility LLC (AT&T Mobility) which resolves allegations that AT&T Mobility charged consumers for third-party products and services that they did not authorize, a practice referred to by the FCC as “cramming.”  AT&T Mobility allegedly placed unauthorized charges for third-party Premium Short Message Services (PSMS) – ringtones, wallpapers, horoscope text messages, and other information – on its customers’ telephone bills, though it ended the practice in January 2014.  The Consent Decree is part of a larger global settlement between ATT& Mobility and the FCC, the Federal Trade Commission (FTC), and Attorneys General of all 50 states and the District of Columbia.  AT&T Mobility will make $105 million in payments for consumer redress, of which $80 million will go to a program that will refund victims of its unlawful cramming activities; $20 million will go to the 50 states and D.C.; and $5 million will be paid to the U.S. Treasury.  Additionally, the Consent Decree requires AT&T to stop charging customers for third-party PSMS products or services; develop and implement a system to verify third-party charges; and implement a six-year compliance plan aimed at preventing unauthorized third-party charges.  On a related note, both the FCC and the FTC recently have been actively pursuing mobile wireless carriers over cramming allegations, and the FCC sought further comment at the end of 2013 on whether certain rules are needed to prevent cramming by wireless carriers.

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