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$105 million settlement another win against one nasty cellphone scam

Gov. Pat Quinn and Attorney General Lisa Madigan came to CUB in the summer of 2012 to sign into law one of the nation's toughest anti-cramming laws for landline bills.

Gov. Pat Quinn and Attorney General Lisa Madigan came to CUB in the summer of 2012 to sign into law one of the nation’s toughest anti-cramming laws for landline bills. Now the fight has turned to wireless bills.

CUB’s consumer advocates were happy to read the headlines this morning: AT&T will pay $105 million to settle claims that its customers were hit with unauthorized third-party charges.

Federal regulators, Illinois Attorney General Lisa Madigan, and the nation’s other attorneys general say its the largest settlement in history involving cramming–when charges from third-party companies are added to your bill for services you didn’t OK.

The development once again shines a light on one of the industry’s uncomfortable truths: Cellphone carriers get a cut of  mysterious third-party fees that show up on bills. In fact, the Federal Trade Commission (FTC) told USA Today that AT&T has kept at least 35 percent of  third-party charges placed on cellphone bills.

While not all third-party charges are unauthorized, questionable fees often are for things like ringtone subscriptions and premium text-messaging services like horoscopes and love tips. (One of our lawyers–and her mom–got hit with a $9.99 fee for love tips. We give her a hard time about that.)

This is the latest in what has been a string of victories against cramming. Late last year, AT&T and other major mobile carriers agreed to ban questionable premium texting services from their bills.

Out of the $105 million settlement, $80 million of it will be used to reimburse affected customers (the rest will go to pay state and federal penalties). If you’re an AT&T customer and you think you were crammed, visit the FTC website to submit a refund claim or call the settlement administrator at 877-819-9692 for more info.

In addition to refunds, AT&T must:

  • obtain customer consent before billing consumers for third-party charges;
  • provide a full refund or credit to consumers who are billed for unauthorized third-party charges going forward;
  • inform new customers about third-party charges and how they can be blocked;
  • present third-party charges in a dedicated section of a bill, along with information about blocking such charges.

Illinois has been a national leader in the fight against cramming. Back in 2012, the governor visited CUB to sign one of the nation’s toughest laws against the scam, basically outlawing cramming on landline bills. Then, CUB launched a statewide campaign to warn consumers that cramming was on the rise on wireless bills.

We’re turning the tide against this scam, but please make sure to read our fact sheet to protect yourself–and, of course, always read your bills!