AT&T to pay $105 million for fake phone charges

WASHINGTON – AT&T wireless customers may want to take a closer look at their old phone bills because they may have money coming back to them.

The Federal Trade Commission said Wednesday that AT&T Mobility LLC, a subsidiary of the telecom giant, has agreed to a hefty $105 million settlement after the government accused the company of unlawfully billing customers for hundreds of millions of dollars in bogus charges – a practice known as cramming. The multi-agency settlement includes $80 million that will be paid to the FTC for consumer refunds.

According to the complaint, the charges appeared on AT&T phone bills but were from third-party companies for services people never asked to receive or were duped into subscribing to – things like horoscope texts, celebrity gossip or flirting tips. The fees were usually about $9.99 a month and were not easy for customers to find on their bills.

The FTC says AT&T kept at least 35 percent of the unauthorized charges it imposed on customers.

Plenty of consumers complained. In 2011 alone, AT&T received more than 1.3 million calls to its customer service department about the charges, the commission said.

“This should have and, in fact, did ring alarm bells at AT&T,” FTC Chairwoman Edith Ramirez said at the settlement announcement. “But instead of acting to stop the charges, AT&T continued to make hundreds of millions of dollars from the practice.”

In a statement, company spokesman Fletcher Cook said the settlement resolves “claims that some of our wireless customers were billed for charges from third-parties that the customers did not authorize.”

He said AT&T last year discontinued third-party billing for premium short messaging services.

From the settlement, an additional $20 million in penalties and fees will go to 50 states and the District of Columbia. Another $5 million will be paid to the Federal Communications Commission.