Combined, the two cramming settlements total nearly $200 million, although some of the money will go to state governments and the U.S. Treasury Department. Federal and state authorities contend AT&T and T-Mobile billed consumers for third-party services that they did not authorize.
“Those carriers have been profiting from those false, fraudulent fees to the tune of 30 to 40 cents of every dollar, and that is not only wrong, it’s illegal, and it should produce refunds for consumers, but it won’t automatically do so,” the Hartford Courant quoted Blumenthal as saying during a news conference Monday that was held by the senator and FCC commissioner Jessica Rosenworcel.
Blumenthal, a Democrat who has introduced cramming legislation in Congress and previously served five terms as Connecticut’s Attorney General, said affected consumers should submit claims for refunds.
The FCC said victims in the billing schemes typically were charged $9.99 per month for services they didn’t order, such as ringtones and text-message subscriptions for celebrity gossip, flirting tips and horoscopes. The problem is said to be pervasive within the wireless industry. Over the summer, a Senate Judiciary Committee report described a cramming industry that was defrauding consumers of hundreds of millions of dollars. Third-party billing is a lucrative practice for AT&T, Sprint, T-Mobile and Verizon Wireless, with the carriers keeping up to 40 percent of each vendor charge, according to the report.
But in recent years, third-party billing has attracted the attention of state and federal regulators. In the last year, the FCC alone has taken seven enforcement actions against carriers for alleged cramming and slamming infractions.
The AT&T settlement, FCC Chairman Tom Wheeler told reporters in October, ranks as the largest enforcement action and biggest cramming settlement in the agency’s history. As part of the record $105 million settlement, AT&T Mobility agreed to earmark $80 million for distributions to current and former customers who were charged for third-party services they did not authorize.
AT&T customers have taken notice. An FTC official, Jessica Rich, told TIME Magazine a few months ago that 359,000 people already had submitted claims, requesting refunds for unauthorized charges. Rich said the response to AT&T’s settlement from consumers is one of the largest the FTC has ever observed.
T-Mobile customers also have a chance to get back some money. Earlier this month, the FCC announced that T-Mobile had agreed to pay $67.5 million to fund a program that will support victims as part of a $90 million settlement. T-Mobile will contribute more funds if consumer claims exceed the amount allocated to the victim program.