Schuette Announces $105 Million National Settlement with AT&T Mobility Over Cell Phone 'Cramming'

Contact: Joy Yearout 517-373-8060

October 9, 2014

LANSING - Attorney General Bill Schuette today announced that his Consumer Protection Division—along with the attorneys general of 49 States and the District of Columbia, the Federal Trade Commission, and the Federal Communications Commission—reached a settlement with AT&T Mobility LLC that includes a $105 million payment, resolving allegations that AT&T Mobility placed charges for third-party services on consumers' mobile telephone bills that had not been authorized by the consumer, a practice known as "cramming." 

"Consumers should never be charged for services that they did not order," said Schuette. "We will continue to aggressively pursue anyone seeking to skirt the rules at the expense of Michigan families," said Schuette.

Consumers who have been crammed often complain about charges, typically $9.99 per month for "premium" text message subscription services, also known as PSMS. These include: horoscopes, trivia, and sports scores that they have never heard of or requested.  The attorneys general and federal regulators allege that cramming occurred when AT&T Mobility placed charges on consumers' mobile telephone bills for these services without the consumer's knowledge or consent.  AT&T Mobility is the first mobile telephone provider to enter into a national settlement to resolve allegations regarding cramming.  AT&T Mobility was among the four major mobile carriers—in addition to Verizon, Sprint and T-Mobile—that announced it would cease billing their customers for PSMS last fall.

How to Submit Claims

Under the terms of the settlements, AT&T Mobility is required to provide $80 million in funds to be used to pay refunds to consumers who were victims of cramming.  The fund will be administrated by the Federal Trade Commission.

Consumers can submit claims under the AT&T Mobility cramming refund program. Consumers can find information about how to obtain a refund.  If consumers are unsure about whether they are eligible for a refund, they can visit the claims website or contact the Claims Administrator at 877-819-9692 for more information.

Schuette: Stay on Guard Against Unauthorized Cell Phone Charges

"Always review cell phone bills thoroughly for charges that are unfamiliar or you don't understand," Schuette advises consumers.  "Ignoring small charges can add up to big amounts.  Some cramming charges can be as small as $2 or $3 per month and could be easy to miss.  Before paying suspicious charges, consult with your cell phone provider to be sure you are paying for services that you authorized; your bill statement should explain how to dispute errors."  

Protecting Consumers Moving Forward

The settlement requires AT&T Mobility to stay out of the commercial PSMS business—the platform to which law enforcement agencies attribute the majority of the mobile cramming problem.  Additional terms require AT&T Mobility to take a number of steps designed to ensure that it only bills consumers for third-party charges that have been authorized, including the following:

  • Obtain consumers' express consent before billing for third-party charges, and must ensure that consumers are only charged for services if the consumer has been informed of all material terms and conditions of their payment;
  • Provide a full refund or credit to consumers who are billed for unauthorized third-party charges at any time after this settlement;
  • Inform its customers at the time of service sign up that their mobile phone can be used to pay for third-party charges, and must inform consumers how those third-party charges can be blocked if the consumer doesn't want to use their phone as a payment method for third-party products; and
  • Present third-party charges in a dedicated section of consumers' 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 also agreed to pay $20 million to the Attorneys General and $5 million to the Federal Communications Commission as a penalty and to pay for the costs of the investigation.  The State of Michigan received $387,814 for its participation in the settlement.

A.G. Schuette Fighting for Michigan Consumers

Since 2011, Attorney General Schuette's Consumer Protection Division has collected more than $24 million in consumer refunds, cancelled debts, and civil penalties – the largest recovery recorded for any Michigan attorney general over a three-year period.  Schuette's office has also responded to more than 34,000 written consumer complaints through his consumer complaint mediation program.

Attorney General Schuette encourages victims of unfair, misleading, or deceptive business practices to contact the Department's Consumer Protection Division at 517-373-1140 or toll free at 877-765-8388.

To file a consumer complaint, Michigan residents can submit an online complaint form through the Attorney General's website, or mail a letter explaining the problem to:

Michigan Attorney General Bill Schuette

Consumer Protection Division

P.O. Box 30213

Lansing, MI 48909