AT&T will pay $105 million to settle a federal investigation into claims it billed customers “millions of dollars” for add-on services without their consent, a practice called “cramming.”
Of the $105 million settlement, AT&T will pay $25 million in penalties and the remaining $80 million will be refunded to customers.
Though AT&T said it stopped billing customers for unauthorized charges last December, cramming is a common practice mobile phone operators use to boost revenues–and something the U.S. government is cracking down on. In July, the Federal Trade Commission filed a lawsuit against T-Mobile for fraudulently billing customers for premium text-message subscriptions, such as horoscope information or celebrity gossip. T-Mobile said it ended the practice in 2013.
The investigation involving the FTC and Federal Communications Commission cited customer complaints that AT&T refused to issue full refunds. In many instances, the wireless operator only returned one to two months worth of charges. Unknowing subscribers had an additional $10 a month tacked on to their phone bills for various subscriptions, including for ringtones, wallpapers, horoscopes, flirting tips, and celebrity gossip.