News Release: Hawaii Part of $105 Million Mobile Cramming Settlement with AT&T Mobility

Posted on Oct 8, 2014 in News Releases

 

DEPARTMENT OF COMMERCE AND CONSUMER AFFAIRS

Office of Consumer Protection

 

NEIL ABERCROMBIE
GOVERNOR

KEALII S. LOPEZ
DIRECTOR

BRUCE KIM
OCP EXECUTIVE DIRECTOR

 

FOR IMMEDIATE RELEASE

Oct. 8, 2014

Hawaii Part of $105 Million Mobile Cramming Settlement with AT&T Mobility

Hawaii to Receive Over $226,000 for Its Part in Settlement

 

HONOLULU —The State of Hawaii Department of Commerce and Consumer Affairs (DCCA) announced today that its Office of Consumer Protection (OCP), along with 49 other states and the District of Columbia, the Federal Trade Commission (FTC), and the Federal Communications Commission, reached a $105 million settlement with AT&T Mobility LLC. This action resolves allegations that the company charged for third-party services not authorized by the consumer, a practice known as “mobile cramming.”

 

Consumers who have been “crammed” often complain about charges, typically $9.99 per month, for “premium” text message subscription services (also known as “PSMS”), such as horoscopes, trivia, and sports scores, which the consumers have never heard of or requested. OCP, together with the other states 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 national settlement to resolve allegations regarding cramming.  AT&T Mobility was among the major mobile carriers—Verizon, Sprint and T-Mobile—to announce it would cease billing their customers for commercial PSMS charges last fall.

 

“This settlement will result in significant protections for Hawaii customers of AT&T Mobility to prevent mobile cramming in the future,” said OCP Executive Director Bruce B. Kim. “Anyone who believes that they have been the victim of such deceptive practices should visit the FTC website as soon as possible to see if they qualify for a refund.”

 

Under the terms of the settlements, AT&T Mobility is required to provide $80 million of the $105 million in funds to refund consumers who were victims of cramming. The fund will be administered by the FTC.

 

The settlement requires AT&T Mobility to stay out of the commercial PSMS business—the platform to which law enforcement agencies attribute the lion’s share 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:

 

–     AT&T Mobility must obtain consumers’ express consent before billing consumers 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;
–     AT&T Mobility must provide a full refund or credit to consumers who are billed for unauthorized third-party charges at any time after this settlement;
–     AT&T Mobility must inform its customers when the consumers sign up for services that their mobile phone can be used to pay for third-party charges, and must inform consumers of 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
–     AT&T Mobility must 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 50 States and the District of Columbia, and $5 million to the Federal Communications Commission.  OCP will receive $226,648.39 for its participation in the settlement.

 

Beginning today, consumers may submit claims under the AT&T Mobility cramming refund program by visiting www.ftc.gov/att, where consumers can find information about how to obtain a refund. If consumers are unsure whether they are eligible for a refund, they can visit the claims website or contact the Claims Administrator at 1-877-819-9692 for more information.

 

OCP was represented in this case by OCP staff attorney Landon M.M. Murata.

 

The State of Hawaii’s DCCA Office of Consumer Protection educates and protects consumers from unlawful acts or practices by companies which may cause harm to consumers.  If you have further questions about our services, contact the Office of Consumer Protection at (808) 586-2636.

 

# # #

 

Media Contact:

Brent Suyama

Communications Officer

808-586-7582

bsuyama@dcca.hawaii.gov

cca.hawaii.gov