FCC Slams AT&T With $105M Settlement For Bogus Customer Charges

The FCC slapped AT&T with the largest “enforcement action” in its history, the agency announced today. The total bill, $105 million, will include $80 million in payments to scammed AT&T customers, $20 million to “state governments participating in the settlement,” with the last $5 million going to the FCC itself, it said today in a statement.

The charges relate to cramming, a practice that sees unwanted recurring charges for ringtones, wallpapers and the like end up on consumers’ cell phone bills, often unbeknownst to them. They end up there, placed by nasty people out to harm folks. People are often tricked into signing up for something that they did not understand would entail a regular payment. A normal cost for one of these “crammed” services is $9.99 per month.

According to the FCC, AT&T would sometimes only refund part of the crammed charges after consumer complaint. AT&T presumably kept its cut of the withheld funds. The cut that the phone company takes is said to be at least 35 percent.

The $105 million settlement, of which on a portion is a true fine is not enough. AT&T only paying $25 million in punitive damages is a farce. For a large corporation to allow for the vulnerable to be taken advantage of by what FCC Chairman Tom Wheeler called “unscrupulous” folks for its personal enrichment is not merely sad, it’s abusive.

The FCC announced that, as part of the agreement, it has “secured strong consumer protections” that will “include requirements that AT&T Mobility no longer offer commercial third-party ‘premium SMS’ charges, adopt processes to obtain express informed consent from customers prior to allowing third-party charges on their phone bills.”

That that was not the law before now is somewhat dispiriting.

It’s a good day for the consumer, given that at least one mobile bad practice has been successfully fined. Is cramming over? No. But it is a step in the right direction.

Authors note: I used the word ‘fine’ in the original headline, which wasn’t precise. Post has been updated.