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AT&T Developer ProgramAT&T Mobility entered into a $105 million agreement, ending a practice known as “cramming” by which third parties of the telecommunications giant placed unauthorized charges on phone bills. In many instances, customers were charged an extra $9.99 per month for services such as text messages related to horoscopes, sports scores or trivia questions.

It is the largest penalty levied against a mobile carrier related to “cramming” allegations, according to the FTC.

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An AT&T bill with the charges not clearly shown.

“I will not tolerate this deceptive billing practice,” Washington State Attorney General Bob Ferguson said in a release. “Any company that allows unauthorized charges to be hidden in the fine print of a consumer’s telephone bill will have to answer to my office.”

As many as 500,000 residents in Washington state may have been impacted by the hidden charges. Those who may be eligible for a refund can go here.

AT&T issued this statement on the settlement agreement:

In the past, our wireless customers could purchase services like ringtones from other companies using Premium Short Messaging Services (PSMS) and we would put those charges on their bills. Other wireless carriers did the same.

While we had rigorous protections in place to guard consumers against unauthorized billing from these companies, last year we discontinued third-party billing for PSMS services.

Today, we reached a broad settlement to resolve claims that some of our wireless customers were billed for charges from third-parties that the customers did not authorize. This settlement gives our customers who believe they were wrongfully billed for PSMS services the ability to get a refund.

Here’s the full release from Washington state Attorney General Bob Ferguson:

Attorney General Bob Ferguson today announced a $105 million agreement with AT&T Mobility LLC under which the company agreed to stop allowing unauthorized third-party service charges to be placed on subscribers’ telephone bills.

Consumer victims of this practice, called “cramming,” are socked with charges, typically $9.99 per month, for “premium” text message services — such as horoscopes, trivia, and sports scores — that they have never requested or even heard of.

Under the agreement, AT&T Mobility will pay $80 million to the Federal Trade Commission (FTC). That money will be returned to consumers nationwide who were charged unauthorized third-party fees. More than half a million Washingtonians may have been affected.

“I will not tolerate this deceptive billing practice,” Attorney General Bob Ferguson said. “Any company that allows unauthorized charges to be hidden in the fine print of a consumer’s telephone bill will have to answer to my office.”

Beginning today, current or former AT&T customers may submit claims to the AT&T Mobility cramming refund program by visiting www.ftc.gov/att. On that website, 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 1-877-819-9692.

The Attorney General’s Consumer Protection Division worked with the attorneys general of all 49 other states and the District of Columbia as well as the FTC and the Federal Communications Commission to bring about today’s resolution.

AT&T Mobility is the first mobile telephone provider to enter into a national settlement resolving issues related to cramming. All four major cell providers — AT&T Mobility, Verizon, Sprint and T-Mobile — agreed to stop billing their customers for the premium text services, also known as PSMS, last fall.

The agreement requires AT&T Mobility to stay out of the PSMS business, which law enforcement agencies believe represents the lion’s share of the cramming problem.

The company must also take steps to ensure it’s only billing customers for charges that have been authorized. These steps include:

  • Obtaining customers’ express consent before billing for third-party charges, and ensuring consumers are only charged for services if they have been informed of all material terms and conditions of their payment.
  • Providing a full refund or credit to any customer billed for unauthorized third-party charges in the future;
  • Informing new customers that they can either block third-party charges or choose to use their mobile phone to pay third-party charges;
  • Presenting third-party charges in a dedicated section of consumers’ mobile phone bills, which clearly distinguishes them from AT&T Mobility’s charges and contains information about how to block third-party charges.

AT&T Mobility also agreed to pay $20 million to the attorneys general and $5 million to the FCC as a penalty and to pay for the costs of the investigation. Washington received $807,314 for its participation in the agreement.

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