The U.S. federal regulators announced on Wednesday that AT&T will have to pay $105 million to settle mobile cramming cases.
Mobile cramming is the practice of placing unauthorized charges on customers' bills. Since 2013, the U.S. Federal Communications Commission (FCC) has taken significant steps to combat this practice to protect the consumers.
Customers stated that they were charged for services such as flirting tips, trivia and daily horoscopes that they never activated nor requested. This service is also referred to as "premium short messaging services" (PSMS).
"What's shocking to me, as I thought about this particular settlement, is that we're talking about reputable companies like AT&T and others. This isn't, you know, Phil's Phone Shack that's doing this," Maryland Attorney General Doug Gansler told Reuters.
Federal Trade Commission chairwoman Edith Ramirez explained that most consumers have to pay $9.99 for these unauthorized services, which were usually computed under the AT&T monthly subscription fees. The investigation found that 35 percent of the unauthorized charges went directly to the telecom provider and it failed to provide refunds to its customers, the New York Times reported.
The FCC imposed $80 million to refund customers, $20 million for fees and penalties for 50 states and the District of Columbia, and $5 million penalty to the FCC for mobile cramming, according to the agency press release.
"I am very pleased that this settlement will put tens of millions of dollars back in the pockets of consumers harmed by AT&T's cramming of its mobile customers," said Ramirez. "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."
FCC Chairman Tom Wheeler explained that mobile cramming affects at least 20 million consumers per year. He also added that the agency is probing other wireless providers regarding this practice.
Meanwhile, AT&T clarified that they had "rigorous protections" in place to prevent unauthorized billing, and had discontinued third-party billing for PSMS services.
"This settlement gives our customers who believe they were wrongfully billed for PSMS services the ability to get a refund," AT&T spokesman Michael Balmoris said.
