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 Madigan, the other attorneys general, the FTC and the FCC reached
the settlement following reports of cramming from phone customers
who were billed for services by third-party companies that they
never authorized or wanted, such as “premium” text message
subscription services (PSMS) that sent customers horoscopes, trivia
and sports updates for $9.99 a month.
Cramming happens when third-party vendors use consumers’ phone
numbers much like a credit card. Vendors add charges to phone bills
for bogus products or services, such as celebrity gossip items,
horoscopes, trivia and joke-of-the-day offerings, that consumers and
businesses never requested or authorized. But because consumers
rarely, if ever, detect the scam, the scammers often illegally
profit for months at a time.
Madigan said wireless cramming is poised to become a major source of
consumer fraud, much like it did on landline phones before the
practice was banned in Illinois. In 2012, Madigan drafted and
negotiated a law that banned unauthorized charges on landline
phones, making Illinois only the second state in the nation to ban
the practice on wired phone lines. But as more people now use cell
phones as their primary phones, scam artists are migrating to
wireless billing schemes, spurring the need for stronger consumer
protections.
“Phone bill cramming is a pervasive problem impacting our landline
and now mobile phone bills,” Madigan said. “This settlement is a
step forward in stopping scammers from illegally profiting by
putting unapproved charges on our bills. The new protections will
ensure all third-party charges are first authorized by AT&T Mobility
customers.”
Under the terms of today’s settlement, AT&T Mobility is required to
provide $80 million in refunds to consumers who were victims of
cramming. Refunds will be administered by the Federal Trade
Commission. Consumers who believe they may have been a victim can
learn more by visiting www.ftc.gov/att. Consumers who are unsure
about their eligibility for a refund can visit the website or
contact the Claims Administrator at 1-877-819-9692 for more
information.
The settlement bans AT&T Mobility from the commercial
PSMS business. It also requires AT&T Mobility to take a number of
steps designed to ensure that the company only bills consumers for
third-party charges that have been authorized, including the
following:
- AT&T Mobility must obtain a customer’s expressed consent
before billing consumers for third-party charges, and must
ensure that consumers are only charged for services if they have
been informed of all material terms and conditions of their
payment;
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- 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 customers when they sign up
for AT&T services that their mobile phone can be used to pay
for third-party charges and how those third-party charges
can be blocked if consumers do not 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 customers’ 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.
AT&T Mobility is the first mobile telephone provider to
enter into a national settlement to resolve allegations
regarding cramming; AT&T Mobility was one of the four major
mobile carriers—in addition to Verizon, Sprint and
T-Mobile—that announced last fall it would cease billing
customers for commercial PSMS charges.
In total, the Attorney General’s office has filed 30
lawsuits against crammers. Among the most glaring of the
targets for these scams was by US Credit Find Inc., a
Venice, Calif.-based operation, which crammed a Springfield
public library’s dial-a-story telephone line. Madigan sued
US Credit Find Inc. in 2009.
Over the last several years, Attorney General Madigan has
advocated for a nationwide ban on phone bill cramming,
testifying before the U.S. Senate Commerce Committee and
filing comments with the Federal Communications Commission.
[Illinois Attorney General Lisa
Madigan]
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