AT&T reached a $105 million settlement with the Federal Communications Commission on Wednesday, following an investigation into allegations that the telecommunications giant billed cell phone customers millions of dollars in unauthorized third-party subscriptions and premium text messaging services.
The settlement, which was negotiated in coordination with the Federal Trade Commission and the attorneys general of all 50 states and the District of Columbia, is the largest enforcement in FCC history.
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Terms of the deal require AT&T to pay out $80 million to current and former AT&T customers who were billed for third-party services they did not authorize. Additionally, AT&T will pay $20 million to state governments participating in the settlement, and make a $5 million penalty payment to the U.S. Treasury.
The investigation was launched when the FCC’s Enforcement Bureau received complaints from consumers alleging AT&T billed customers with months of unauthorized charges for third-party services that they did not request.
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In some cases, customers reported that AT&T refused to issue refunds or would only refund one or two months’ worth of such charges, which included monthly subscriptions for ringtones, wallpaper, and text messages providing horoscopes, flirting tips and celebrity gossip at, typically, $9.99 each.
“Today’s enforcement action is a victory for consumers nationwide,” FCC Chairman Tom Wheeler said in a statement. “Carriers should be on notice that we will not tolerate any business practice that saddles consumers with unauthorized charges on their phone bills. This settlement — a joint effort between the FCC, FTC and all 50 states and the District of Columbia — is a prime example of government agencies working together on behalf of American consumers.”
FTC Chairman Edith Ramirez said at a press conference Wednesday that the investigation showed that since at least 2009, AT&T had “placed charges by other companies onto its customers’ mobile phone bills for unauthorized services.”
“We allege AT&T had strong reason to suspect these charges were unauthorized yet continued to place these charges on its customers’ bills.”
Ramirez also said that the FTC wanted to ensure that mobile phone customers get full consumer protections. “The FTC is using its authority to ensure that as mobile devices become more firmly woven in the daily lives of greater numbers of Americans, they enjoy the same consumer protections as they have in other aspects of their lives,” she concluded.